Swift Energy Says Rita Caused Only Minimal Damage
Swift Energy Company says that initial physical assessments of its Lake Washington, Bay De Chene, Cote Blanche Island and Masters Creek Fields in Louisiana and its Brookeland Field in Texas that were affected by Hurricane Rita show minimal damage. Detailed inspections are still in process for all wells and facilities in such fields, and repair work necessary to restart production is underway in some areas. Swift Energy expects domestic production for the third quarter 2005 to be approximately 9.0 Billion cubic feet equivalent ("Bcfe").
Limited oil production at the Lake Washington Field, in Plaquemines Parish, Louisiana, is expected to resume within the next few weeks. Work crews have been mobilized to this field to resume repair work for damage that resulted from Hurricane Katrina and now from Hurricane Rita as well. While transportation and markets are accessible for oil production at this time, there continue to be downstream constraints on transportation and processing facilities for natural gas in this area. At this time, Swift Energy can barge its crude oil but has limited access to a crude oil pipeline that serves the Lake Washington area. The natural gas pipeline that handles Swift Energy's natural gas production in Lake Washington is still not operating pursuant to force majeure provisions. Pre-hurricane production levels of both oil and natural gas will not be possible from this field until transportation and processing is available for the associated natural gas production.
The status of Bay de Chene Field, in Jefferson and Lafourche parishes, has not changed and the field remains shut-in awaiting repairs from Hurricane Katrina. Cote Blanche Island Field, in St. Mary's Parish, Louisiana, which had not suffered any damage from Hurricane Katrina, did suffer damage from Hurricane Rita and a full assessment is now underway to determine the extent of such damage. It cannot be determined at this time when production in each of these fields will begin. Restoration of production in these fields is expected to take longer primarily because the Company is continuing to focus on Lake Washington.
Drilling, completion and recompletion operations are expected to commence over the next several days with two drilling rigs and one completion rig in Lake Washington and one completion rig working in Bay de Chene.
Swift Energy's Toledo Bend area, consisting of the Brookeland Field located in East Texas in Jasper and Newton Counties, and the Masters Creek Field located in the western Louisiana parishes of Rapides and Vernon, remains shut-in awaiting the return of electrical power. Minor damage has been observed at only one of the 74 well sites inspected so far in the Toledo Bend area and is not expected to impact the restart of the fields' production. Transportation and processing for both crude oil and natural gas is constrained at this time in the Toledo Bend area due to lack of power. The natural gas production from both fields is processed at the Brookeland plant in this area, which is not operating also due to lack of power. The plant operator has estimated that the plant would be returned to service in approximately 48 hours once power is restored, which is expected within two to five weeks.
Swift Energy continues to monitor the availability of pipelines and processing plants to transport the Company's product to market. The situation in southeast Texas and southern Louisiana remains dynamic with many factors beyond the control of Swift Energy, including but not limited to the deliverability of replacement parts, displacement and availability of personnel and third party contractors, and impeded access to certain fields.
Swift Energy's third quarter estimate of domestic production of 9.0 Bcfe is in line with its previous disclosures, which reduced by 2.75 Bcfe to 3.25 Bcfe the original third quarter 2005 guidance of 11.75 Bcfe to 12.25 Bcfe. Swift Energy's third quarter production has been impacted by the various production shut-ins necessitated by Tropical Storm Cindy, Hurricane Dennis, Hurricane Katrina and Hurricane Rita. New Zealand production for the third quarter is still estimated to be 4.0 Bcfe to 4.5 Bcfe.
As previously reported, the aggregate level of Swift Energy's third quarter total costs for the guided cost categories such as lease operating expenses and general and administrative expenses are expected to remain approximately the same for the quarter, however all costs are expected to increase on a per unit of production basis from previous guidance.