Swift Increases Earnings 88% During Q1
Swift Energy Company announced that its income from continuing operations for the first quarter of 2008 increased 88% to $49.8 million, or $1.61 per diluted share, compared to $26.4 million of income from continuing operations earned in the first quarter of 2007, or $0.87 per diluted share. Adjusted cash flow from continuing operations for the first quarter of 2008 increased 62% to $136.3 million, or $4.41 per diluted share, compared to $84.2 million of adjusted cash flow, or $2.76 per diluted share, for the same period of 2007.
Swift Energy produced 2.57 million barrels of oil equivalent ("MMBoe") from continuing operations (domestically) during the first quarter of 2008, which is a 1% increase compared to first quarter 2007 production of 2.53 MMBoe from continuing operations.
Terry Swift, CEO of Swift Energy, commented, "Against a backdrop of historically high crude oil and natural gas prices, Swift Energy has continued to drill significant wells across all of our operating areas, completed construction of the Lake Washington Westside Facility and tied in additional natural gas takeaway capacity in Bay de Chene. Given the exceptional external environment and current and anticipated operating results, we are increasing Swift Energy's 2008 estimated capital outlays from $425-$475 million to $475-$525 million. This increase in spending will fund increased activity in both South Louisiana and South Texas. Swift Energy currently has the most extensive opportunity set in its 28-year history, and we are very fortunate to have such an exceptional group of people developing these opportunities."
Revenues and Expenses
Total revenues from continuing operations for the first quarter of 2008 increased 53% to $199.0 million from the $130.1 million from continuing operations generated in the first quarter of 2007, primarily attributable to higher commodity prices.
Depreciation, depletion and amortization expense ("DD&A") of $20.43 per barrel of oil equivalent ("Boe") in the first quarter 2008 increased from $16.46 per Boe of DD&A in the comparable period in 2007 primarily as a result of an increased depletable base, partially offset by higher reserves. Lease operating expenses, before severance and ad valorem taxes, were $10.28 per Boe in the first quarter 2008, an increase of 66% compared to $6.20 per Boe in the first quarter of 2007. The increase in lease operating expenses was predominately due to higher than projected workover expenses in Lake Washington and higher gas processing costs associated with additional volumes from the Cotulla acquisition. Also, severance and ad valorem taxes were up appreciably to $8.61 per Boe from $6.33 per Boe in the comparable period due to higher realized commodity prices.
General and administrative expenses associated with increased staffing levels rose to $3.86 per Boe during the first quarter 2008 from $2.99 per Boe in the same period in 2007. Interest expense per Boe increased 27% to $3.38 per Boe in the first quarter 2008 compared to $2.66 per Boe for the same period in 2007 due to increased bank debt and lower capitalized interest.
Production & Pricing
Swift Energy's first quarter 2008 production from continuing operations of 2.57 MMBoe represents a 1% increase over comparable production from continuing operations in the same period in 2007 and an 8% decrease compared to the fourth quarter of 2007 continuing operations. Year over year first quarter production benefited from the recent acquisition of three fields in South Texas, which resulted in approximately twice as much production from this region compared to first quarter 2007 levels. The decrease in production from fourth quarter 2007 to first quarter 2008 was anticipated and caused by a combination of natural declines in production as our wells in Lake Washington mature and a reduction of the production of several wells in the Newport area in our Lake Washington field to preserve reservoir pressure in advance of a pressure maintenance program. This pressure maintenance program has commenced with the recent start-up of the Westside facility and is expected to take several months to bring about a production response.
The Company realized an aggregate average price of $77.80 per Boe for its continuing operations, an increase of 51% from the $51.38 average price received in the first quarter of 2007. In the first quarter of 2008, average crude oil prices increased 72% to $99.43 per barrel from $57.87 per barrel realized in the same period in 2007. For the same periods, average natural gas prices were $7.97 per thousand cubic feet ("Mcf"), an increase of 35% from the $5.92 per Mcf domestic average realized a year earlier. Prices for natural gas liquids ("NGL") averaged $59.80 per barrel in the first quarter for a 50% increase over first quarter 2007 NGL prices of $39.90 per barrel.