Swift Energy Notes Increased Drilling Activity During 4Q09
Swift Energy announced earnings for the fourth quarter of 2009 of $14.6 million, or $0.38 per diluted share, which compares to a net loss incurred in the fourth quarter of 2008 (due to a non-cash ceiling test write down).
Adjusted cash flow (cash flow before working capital changes, a non-GAAP measure) for the fourth quarter of 2009 decreased to $78.9 million, or $2.10 per diluted share, compared to adjusted cash flow of $85.3 million, or $2.76 per diluted share, for the fourth quarter 2008.
Swift Energy produced 2.21 million barrels of oil equivalent ("MMBoe") during the fourth quarter of 2009, which was essentially unchanged compared to third quarter 2009 production, and a 10% decrease compared to fourth quarter 2008 production of 2.47 MMBoe. The Company's daily rate of production at the end of the fourth quarter was 25,100 net barrels of oil equivalent per day ("BOE/d").
For the full year 2009, Swift Energy reported a $39.1 million net loss, attributable to a $79.3 million non-cash ceiling test write down recorded in the first quarter of 2009. This compares favorably to the more significant net loss incurred in 2008 due to a fourth quarter 2008 non-cash ceiling test write down. Full year 2009 adjusted cash flow of $225.2 million, or $6.70 per diluted share, decreased from the $559.9 million of adjusted cash flow, or $18.26 per diluted share, for the full year 2008. For the full year 2009, production was 9.06 MMBoe, a 10% decrease when compared to 2008 full year production of 10.1 MMBoe. As a result of lower commodity prices and production levels, total revenues for the full year 2009 decreased 55% to $370.4 million from the $820.8 million generated during 2008.
"During the fourth quarter of 2009, we increased our drilling activity, and during January of this year, we completed two new, high rate horizontal wells in the Olmos formation in South Texas," commented Terry Swift, Chief Executive Officer of Swift Energy. "Continuing the execution of our fourth quarter plans, we have now drilled two Swift Energy operated 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 underway 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.
"The global economic downturn of the past year brought great uncertainty to the entire oil and gas sector. Swift Energy was able to quickly adjust to this difficult environment by keeping the cost levels of our operations under control and maintaining an operating discipline. As energy prices improved and global credit markets opened up, we also took decisive action to strengthen our balance sheet and strategically improve the Company's growth opportunities. During 2009, we high graded our Eagle Ford and Olmos acreage positions and initiated horizontal drilling and completion activities to further appraise these positions.
"We ended 2009 with a daily production rate of 25,100 net barrels of oil equivalent per day. We are forecasting moderate corporate production and reserves growth targets for 2010, and we expect our 2010 daily production exit rate to be approximately 10% higher than our 2009 exit rate. We believe that with our South Texas and South Louisiana opportunities, we have positioned the Company for future reserves and production growth from our core areas along the Gulf Coast."
Swift Energy's year-end 2009 reserves consist of 112.9 MMboe (677.4 Bcfe), 3% less than 2008 year-end reserves of 116.4 MMboe (698.4 Bcfe). Of these reserves, 50% were proved developed, compared to 53% of reserves being classified as proved developed at year-end 2008. The decrease in year end reserve volumes is consistent with previously stated guidance of a 2% to 4% decrease attributable to reduced operating activity throughout 2009.
Under new reserves disclosure guidelines providing for year-end present values of reserves to be determined using the average of first-day-of-the-month prices during 2009, Swift Energy's year-end 2009 proved reserves totaled approximately $1.3 billion of present value discounted at 10% per year (PV-10, a non-GAAP measure - see page 6 for reconciliation to the GAAP measure). Pricing for reserves and PV-10 calculations utilized $59.76 per barrel for crude oil and $3.78 per thousand cubic feet ("Mcf") for natural gas as a twelve month average price for 2009. Using constant pricing at year-end as dictated under previous guidelines, the Company's year-end 2009 PV-10 value of its proved reserves would have been approximately $2.0 billion. This compares to an approximate $1.3 billion PV-10 value for the Company's 2008 year-end proved reserves, also prepared under previous guidelines.
Swift Energy's reserves are comprised 57% of crude oil and natural gas liquids and 43% of natural gas. These percentages are relatively unchanged from 2008 year-end reserves quantities.