Estimates prepared by Swift Energy and audited by H. J. Gruy & Associates project total proved reserves of the purchased properties to be 5.6 million barrels of oil and 9.8 billion cubic feet of natural gas, or a total of 7.3 million barrels of oil equivalent ("BOE"). Current production is less than 1,000 BOE per day net to these purchased interests. The purchase price will be funded with current cash flow and the Company's bank credit facility. Pursuant to the terms of both agreements, Swift Energy will acquire a total of 100% working interest in both fields.
Cote Blanche Island Field ("CBI") is located in the inland waters of Louisiana approximately 100 miles west of Swift Energy's Lake Washington Field. CBI produces oil and gas from multiple Miocene sands ranging in depth from less than 11,500 feet to greater than 18,500 feet, with the majority of the known sands normally pressured. CBI was discovered in the late 1940s and was operated primarily by a major oil company. It is located on a salt dome feature and has had cumulative production of over 132 million BOE. The field consists of approximately 4,215 gross acres with an average net revenue interest of approximately 80%. Similar to Lake Washington, complex faulting associated with the salt dome feature is believed to have created a large number of oil and gas reservoirs. In addition to development potential in the field, there are several future exploration opportunities.
Bay de Chene Field ("BDC") is located in the inland waters on the Lafourche-Jefferson Parish line in Louisiana, which is approximately 30 miles northwest of Swift Energy's Lake Washington Field, and BDC produces oil and gas predominantly from multiple Miocene sands ranging in depth from less than 1,500 feet to greater than 13,000 feet. BDC was also discovered in the early 1940s and operated primarily by the same major oil company that operated CBI. It is also located on a highly-faulted salt dome feature that has produced over 142 million BOE since its discovery. The field consists of more than 14,000 gross acres with an average net revenue interest of approximately 80%.
Approximately 9% of the estimated proved reserve volumes are proved developed producing reserves, with the remaining estimated proved reserves classified as proved behind pipe and proved undeveloped, which the Company believes will require approximately $50 million to develop. In addition to the proved reserves, the Company has identified several potential exploratory opportunities at both fields. Each field has approximately 10 producing wells, numerous non-producing wells, a centralized processing platform and several tank batteries.
Swift Energy plans to initiate a multi-year exploitation program beginning in the second-half of 2005 to drill proved undeveloped locations, reactivate wells, enhance facilities and improve per unit operating costs. It is expected that Swift Energy's 2005 budget will include $15 million to $20 million of capital expenditures in these two fields. In addition to development activities, the Company plans to further evaluate additional locations with considerable potential that are classified as probable or possible. Swift Energy is in the process of acquiring existing 3-D seismic data over BDC and plans to merge it with the approximate 600 square miles of 3-D seismic data that is part of its previously announced Barataria Bay and Lake Washington merged data set.
Terry Swift, Chief Executive Officer of Swift Energy Company, noted, "This acquisition of interests in the Cote Blanche Island and Bay de Chene fields provides Swift Energy with additional salt dome exploitation opportunities where we can use our experience and capital to enhance production from these fields. It also enhances an already significant presence for Swift Energy in South Louisiana, giving the Company three distinct fields over laying salt dome features. Cote Blanche Island and Bay de Chene are strategic additions, which enhance our long-term growth objectives. Over the next 18-24 months, our technical teams will exploit and quantify the hydrocarbon potential of this target-rich area. We will also continue to look at additional potential opportunities in the Gulf Coast region."
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