SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
Commission File Number 1-8754
SWIFT ENERGY COMPANY
(Exact Name of Registrant as Specified in its Charter)
TEXAS 74-2073055
(State of Incorporation) (I.R.S. Employer Identification No.)
16825 Northchase Dr., Suite 400
Houston, Texas 77060
(713) 874-2700
(Address and telephone number of principal executive offices)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No ____
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date.
Common Stock 11,756,431 Shares
($.01 Par Value) (Outstanding at July 31, 1995)
(Class of Stock)
<PAGE>
SWIFT ENERGY COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
- June 30, 1995 and December 31, 1994 3
Condensed Consolidated Statements of Income
- For the Three-month and Six-month periods
ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of
Stockholders' Equity
- June 30, 1995 and December 31, 1994 6
Condensed Consolidated Statements of Cash Flows
- For the Three-month and Six-month periods
ended June 30, 1995 and 1994 7
Notes to Condensed Consolidated Financial
Statements 8
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17
PART II. OTHER INFORMATION
ITEMS 1-3. None 26
ITEM 4. Submission of Matters to a Vote of Security
Holders 26
ITEM 5-6. None 26
SIGNATURES 27
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
_____________ ______________
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,848,864 $ 985,498
Accounts receivable -
Oil and gas sales 11,854,142 12,394,636
Associated limited partnerships
and joint ventures 14,606,462 17,899,150
Joint interest owners 2,582,193 4,335,283
Producing oil and gas properties
held for transfer --- 3,525,841
Other current assets 138,243 68,010
------------- -----------
Total Current Assets 31,029,904 39,208,418
------------- -----------
Property and Equipment:
Oil and gas, using full-cost accounting
Proved properties being amortized 102,561,213 93,368,795
Unproved properties not being amortized 17,860,511 14,805,479
------------ -----------
120,421,724 108,174,274
Furniture, fixtures and other equipment 3,891,338 3,476,695
------------ -----------
124,313,062 111,650,969
Less-Accumulated depreciation, depletion
and amortization (25,367,386) (21,364,949)
------------ -----------
98,945,676 90,286,020
------------ -----------
Other Assets:
Receivables from associated limited
partnerships, net of current portion 2,180,589 1,916,477
Limited partnership formation and
marketing costs, net of current portion 2,901,928 2,991,873
Deferred charges 1,214,509 1,269,955
------------ -----------
6,297,026 6,178,305
------------ -----------
$ 136,272,606 $ 135,672,743
============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
3
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
_____________ ______________
(Unaudited) (Note 1)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term bank borrowings $ 31,300,000 $ 27,229,000
Accounts payable and accrued
liabilities 4,916,777 9,516,005
Payable to associated limited
partnerships 820,457 637,991
Undistributed oil and gas revenues 14,661,162 14,962,863
-------------- ---------------
Total Current Liabilities 51,698,396 52,345,859
-------------- ---------------
Long-Term Debt 28,750,000 28,750,000
Deferred Revenues 6,919,411 7,827,562
Deferred Income Taxes 4,929,223 4,622,191
Commitments and Contingencies
Stockholders' Equity:
Preferred stock $.01 par value, 5,000,000
shares authorized, none outstanding --- ---
Common stock, $.01 par value, 35,000,000
shares authorized, 6,756,431 and
6,685,137 shares issued and outstanding,
respectively 67,564 66,851
Additional paid-in capital 25,477,760 24,885,903
Retained earnings 18,430,252 17,174,377
-------------- ---------------
43,975,576 42,127,131
-------------- ---------------
$ 136,272,606 $ 135,672,743
-------------- ---------------
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
4
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 4,866,432 $ 4,662,036 $ 9,742,473 $ 9,479,306
Fees from limited
partnerships and
joint ventures 134,653 233,640 248,083 342,322
Supervision fees 959,937 951,924 1,864,476 1,895,072
Interest income 11,126 2,199 18,610 20,843
Other, net 592,762 257,155 949,856 507,946
----------- ----------- ----------- ------------
6,564,910 6,106,954 12,823,498 12,245,489
----------- ----------- ----------- ------------
Costs and Expenses:
General and administra-
tive, net of
reimbursement 1,445,297 1,220,972 2,752,062 2,416,303
Depreciation, depletion
and amortization 1,834,209 1,802,483 4,002,438 3,491,421
Oil and gas production 1,707,413 1,218,091 3,336,792 2,360,379
Interest expense 612,543 402,428 1,090,324 761,403
----------- ----------- ----------- ------------
5,599,462 4,643,974 11,181,616 9,029,506
----------- ----------- ----------- ------------
Income before Income
Taxes 965,448 1,462,980 1,641,882 3,215,983
Provision for Income
Taxes 234,173 386,903 386,007 929,184
----------- ----------- ----------- ------------
Income Before Cumulative
Effect of Change in
Accounting Principle 731,275 1,076,077 1,255,875 2,286,799
Cumulative Effect of
Change in Accounting
Principle --- --- --- (16,772,698)
----------- ----------- ----------- ------------
Net Income $ 731,275 $ 1,076,077 $ 1,255,875 $(14,485,899)
=========== ============ =========== ============
Per share amounts -
Primary:
Income Before Cumulative
Effect of Change in
Accounting Principle $ 0.11 $ 0.16 $ 0.19 $ 0.35
=========== =========== =========== ===========
Cumulative Effect of
Change in Accounting
Principle $ --- $ --- $ --- $ (2.54)
=========== =========== =========== ===========
Net Income $ 0.11 $ 0.16 $ 0.19 $ (2.19)
=========== =========== =========== ===========
Fully diluted:
Income Before Cumulative
Effect of Change in
Accounting Principle $ 0.11 $ 0.15 $ 0.19 $ 0.32
=========== =========== =========== ===========
Cumulative Effect of
Change in Accounting
Principle $ --- $ --- $ --- $ (2.54)
=========== =========== =========== ===========
Net Income $ 0.11 $ 0.15 $ 0.19 $ (2.19)
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 6,723,635 6,625,105 6,706,492 6,613,419
=========== =========== =========== ===========
</TABLE>
6
<PAGE>
SWIFT ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock (1) Capital Earnings Total
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $60,011 $17,515,417 $36,890,286 $54,465,714
Stock issued for benefit
plans (26,488 shares) 265 271,176 --- 271,441
Stock options exercised
(21,472 shares) 214 176,808 --- 177,022
Employee stock purchase
plan (29,840 shares) 298 259,683 --- 259,981
10% stock dividend
(606,262 shares) 6,063 6,662,819 (6,668,882) ---
Net Loss --- --- (13,047,027) (13,047,027)
------- ----------- ----------- -----------
Balance, December 31, 1994 $66,851 $24,885,903 $17,174,377 $42,127,131
Stock issued for benefit
plans (31,112 shares) 311 283,463 --- 283,774
Stock options exercised
(2,493 shares) 25 18,929 --- 18,954
Employee stock purchase
plan (37,689 shares) 377 289,465 --- 289,842
Net Income --- --- 1,255,875 1,255,875
------- ----------- ----------- -----------
Balance, June 30, 1995 $67,564 $25,477,760 $18,430,252 $43,975,576
======= =========== =========== ===========
</TABLE>
(1) $.01 Par Value
See accompanying notes to condensed consolidated financial
statements.
7
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended June 30,
-----------------------------
1995 1994
_____________ _____________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 1,255,875 $ (14,485,899)
Adjustments to reconcile net income to
net cash provided
by operating activities -
Depreciation, depletion and amortization 4,002,438 3,491,421
Deferred income taxes 307,032 693,020
Deferred revenue amortization related
to production payment (910,532) (1,043,746)
Cumulative effect of change in accounting
principle --- 16,772,698
Other 55,446 51,660
Change in assets and liabilities -
(Increase) decrease in accounts
receivable 24,074 (606,588)
Increase (decrease) in accounts payable
and accrued liabilities, excluding
income taxes payable 36,416 (108,407)
Increase in income taxes payable 39,182 172,269
------------- ----------
Net Cash Provided by Operating
Activities 4,809,931 4,936,428
------------- ----------
Cash Flows From Investing Activities:
Additions to property and equipment (12,572,148) (13,999,904)
Net cash received (distributed) as operator
of oil and gas properties (2,788,663) (2,498,691)
Property acquisition costs (incurred on
behalf of) reimbursed by partnerships and
joint ventures 6,818,529 (20,710,107)
Limited partnership formation and marketing
costs --- (241,212)
Prepaid drilling costs (70,233) 1,226,430
Other 2,380 (27,997)
------------- ----------
Net Cash Used in Investing Activities (8,610,135) (36,251,481)
------------- ----------
Cash Flows From Financing Activities:
Net proceeds from short-term bank borrowings 4,071,000 30,529,902
Net proceeds from issuances of common stock 592,570 554,672
------------- ----------
Net Cash Provided by Financing
Activities 4,663,570 31,084,574
------------- ----------
Net Increase (Decrease) in Cash and Cash
Equivalents $ 863,366 $ (230,479)
Cash and Cash Equivalents at Beginning
of Period 985,498 636,349
------------- ----------
Cash and Cash Equivalents at End of Period $ 1,848,864 $ 405,870
============= ==========
Supplemental disclosures of cash flow
information:
Cash paid during period for interest, net
of amounts capitalized $ 1,035,012 $ 761,577
Cash paid during period for income taxes $ 49,793 $ 11,951
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
9
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
(1) General Information -
The condensed consolidated financial statements
included herein have been prepared by Swift Energy Company
(the "Company") and are unaudited, except for the balance
sheet at December 31, 1994 which has been prepared from the
audited financial statements at that date. The financial
statements reflect necessary adjustments, all of which were
of a recurring nature, and are in the opinion of management,
necessary for a fair presentation. Certain information and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the
rules and regulations of the Securities and Exchange
Commission (SEC). The Company believes that the disclosures
presented are adequate to allow the information presented
not to be misleading. The condensed consolidated financial
statements should be read in conjunction with the audited
financial statements and the notes thereto included in the
latest Form 10-K and Annual Report.
Because of the volatility in oil and gas prices, the
Company's reliance on limited partner and joint venture
capital and periodic differences in the availability of
commercially attractive oil and gas properties for purchase,
interim results are not necessarily indicative of those for
a full year.
Certain reclassifications have been made to the prior
year balances to conform to current year presentation.
(2) Summary of Significant Accounting Policies -
Oil and Gas Properties
For financial reporting purposes, the Company follows
the "full-cost" method of accounting for oil and gas
property and equipment costs. Under this method of
accounting, all productive and nonproductive costs incurred
in the acquisition, exploration, and development of oil and
gas reserves are capitalized. Such costs include lease
acquisitions, geological and geophysical services, drilling,
completion, equipment and certain general and administrative
costs directly associated with acquisition, exploration and
development activities. General and administrative costs
related to production and general overhead are expensed as
incurred. No gains or losses are recognized upon the sale
or disposition of oil and gas properties, except in
extraordinary transactions. Instead, the proceeds from the
sale of oil and gas properties are treated as a reduction of
oil and gas property costs. Fees from associated oil and
gas exploration and development limited partnerships are
10
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
credited to oil and gas property costs to the extent they
do not represent reimbursement of general and administrative
expenses currently charged to expense.
Future development, site restoration, dismantlement and
abandonment costs, net of salvage values, are estimated on a
property-by-property basis based on current economic
conditions and are amortized to expense as the Company's
capitalized oil and gas property costs are amortized. The
Company's properties are all onshore and historically the
salvage value of the tangible equipment offsets the
Company's site restoration, dismantlement and abandonment
costs. The Company expects this relationship will continue.
The Company computes the provision for depreciation,
depletion, and amortization of oil and gas properties on the
unit-of-production method. Under this method, the Company
computes the provision by multiplying the total unamortized
cost of oil and gas properties including future development,
site restoration, dismantlement and abandonment costs but
excluding costs of unproved properties, by an overall rate
determined by dividing the physical units of oil and gas
produced during the period by the total estimated units of
proved oil and gas reserves. The cost of unproved
properties not being amortized is assessed quarterly to
determine whether the value has been impaired below the
capitalized cost. Any impairment assessed is added to the
cost of proved properties being amortized.
At the end of each quarterly reporting period, the
unamortized cost of oil and gas properties, net of related
deferred income taxes, is limited to the sum of the
estimated future net revenues from proved properties using
current prices, discounted at 10%, and the lower of
cost or fair value of unproved properties, adjusted for
related income tax effects.
Deferred Charges
Legal and accounting fees, underwriting fees, printing
costs, and other direct expenses associated with the
issuance of the Company's Convertible Subordinated
Debentures in June 1993 have been capitalized and are being
amortized over the life of the Debentures, which mature on
June 30, 2003. The balance at June 30, 1995 of $1,214,509 is
net of accumulated amortization of $210,491.
11
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
Hedging Activities
The Company engages periodically in certain limited
hedging activities, but only to the extent of buying price
protection floors for portions of its and the limited
partnerships' oil and gas production. Costs and/or benefits
derived from these price floors are accordingly recorded as
a reduction or increase in oil and gas sales revenues and
are not significant for any period presented.
Deferred Revenues
In May 1992, the Company purchased interests in certain
wells using funds provided by the Company's sale of a
volumetric production payment in these properties. Under
the terms of the production payment agreement, the Company
continues to own the properties purchased but is required to
deliver a minimum quantity of hydrocarbons produced from the
properties (meeting certain quality and heating equivalent
requirements) over a specified period. Since entering into
this agreement, the Company has met all scheduled
deliveries. Net proceeds from the sale of the production
payment were recorded as deferred revenues. Deliveries
under the production payment agreement are recorded as oil
and gas sales revenues and a corresponding reduction of
deferred revenues.
Limited Partnerships and Joint Ventures
The Company forms limited partnerships and joint
ventures for the purpose of acquiring interests in producing
oil and gas properties, and since 1993, partnerships engaged
in drilling for oil and gas reserves. The Company's
investments in associated oil and gas partnerships and its
joint ventures are accounted for using the proportionate
consolidation method, whereby the Company's proportionate
share of each entity's assets, liabilities, revenues and
expenses is included in the appropriate classifications in
the consolidated financial statements. Because the Company
serves as the general partner of these entities, under state
partnership law it is contingently liable for the
liabilities of these partnerships, which liabilities are not
material for any of the periods presented in relation to the
partnerships' respective assets. These partnerships'
liabilities generally consist of third party borrowings from
time to time to fund capital expenditures for development of
oil and gas properties, and will be repaid from oil and gas
sales proceeds of the partnerships in future periods.
12
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
Under the Swift Depositary Interests limited
partnership offering ("SDI Offering") which commenced in
March 1991, the Company receives a reimbursement of certain
costs and a fee, both payable out of revenues. The Company
bears all front-end costs of the offering and partnership
formations for which it receives an interest in the
partnerships. Prior to 1994, the Company recognized as
revenue, fees (earned interests) received in the form of
additional interests in producing oil and gas properties
acquired by these entities. As described in Note 3,
effective January 1, 1994, the Company changed its revenue
recognition policy for earned interests and under its newly
adopted policy, will no longer recognize earned interests as
revenue.
The Company acquires and transfers producing oil and
gas properties to the entities at cost, including interest,
other carrying costs, closing costs, and screening and
evaluation costs of properties not acquired, or in certain
instances at fair market value based upon the opinion of an
independent expert. These costs are reduced by net
operating revenues from the effective date of the
acquisition to the date of transfer to the entities.
Certain designated oil and gas properties acquired in
advance of formation of partnerships or joint ventures and
held by the Company pending resale to those partnerships or
joint ventures are classified as "Producing oil and gas
properties held for transfer".
Commencing September 15, 1993, the Company began
offering, on a private placement basis, general and limited
partnership interests in limited partnerships formed to
drill for oil and gas. As Managing General Partner, the
Company pays for all front-end costs incurred in connection
with this offering, for which the Company receives an
interest in the partnerships. Through June 30, 1995,
approximately $9,000,000 had been raised in three
partnerships in which the proceeds are being invested in
development drilling (approximately 50%) and exploratory
drilling (approximately 25%), with the remaining 25%
dependent upon the results of the initial drilling
activities. The first three partnerships closed December 8,
1993, July 18, 1994, and March 15, 1995. A fourth
partnership which raised approximately $3,900,000 closed on
August 1, 1995.
Costs of syndication and qualification of these limited
partnerships incurred by the Company have been deferred.
Under the current limited partnership offerings, selling and
formation costs borne by the Company serve as the Company's
general partner contribution to such partnerships.
13
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
Income Taxes
The Company accounts for Income Taxes using Statement
of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." SFAS No. 109 utilizes the
liability method and deferred taxes are determined based on
the estimated future tax effects of differences between the
financial statement and tax bases of assets and liabilities
given the provisions of the enacted tax laws.
Income taxes for the interim periods have been provided
using the estimated annualized effective tax rate.
Income (Loss) Per Share
Primary income (loss) per share has been computed using
the weighted average number of common shares outstanding
during the respective periods. Stock options and warrants
outstanding do not have an effect on primary income (loss)
per share. The Company's Convertible Subordinated
Debentures are not common stock equivalents for the purpose
of computing primary income (loss) per share.
Primary income (loss) per share has been retroactively
restated in all periods presented to give recognition to an
equivalent change in capital structure as a result of a 10%
stock dividend. On September 6, 1994, the Company declared
a 10% stock dividend to shareholders of record on September
19, 1994, which was distributed on September 29, 1994,
resulting in an additional 606,262 shares being issued.
The calculation of fully diluted income (loss) per
share assumes conversion of the Company's Convertible
Subordinated Debentures as of the beginning of the period
and the elimination of the related after-tax interest
expense and assumes, as of the beginning of the period,
exercise (using the treasury stock method) of stock options
and warrants. The conversion price of the Convertible
Subordinated Debentures was revised to reflect the 10% stock
dividend declared September 6, 1994. The original
conversion price was $13.50 per common share and the revised
conversion price per common share is $12.27. Fully diluted
income (loss) per share has also been retroactively restated
for all periods presented to give effect to the resulting
conversion price revision stemming from the 10% stock
dividend. The weighted average number of shares used in the
computation of fully diluted per share amounts were
8,993,485 and 9,005,171 for the respective six-month and
three-month periods ended June 30, 1994. During 1995 such
amounts were antidilutive.
14
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
(3) Change in Accounting Principle
In the fourth quarter of 1994, the Company changed its
revenue recognition policy for earned interests, effective
January 1, 1994. Under the Company's newly adopted method
of accounting for earned interests, such amounts will not be
recognized as income. This change was made as the result of
a transition in the Company's current business activities
and changes in the oil and gas limited partnership
syndication markets. The Company feels the change in policy
results in more comparable financial statements in relation
to its current business focus and in comparison to its
current peers and competitors in the oil and gas exploration
and production industry.
The effect of the change on the 1994 six-month period
results was to increase income before cumulative effect of
change in accounting principle by approximately $332,000
or $.05 per share. This increase was a result of the
decrease in depletion expense more than offsetting the
decrease in revenues as a result of not recognizing earned
interests. The effect of the change on the 1994 second
quarter results was to decrease income before cumulative
effect of change in accounting principle by approximately
$64,000 or $0.01 per share. This decrease was a result of
the decrease in revenues as a result of not recognizing
earned interests, slightly offsetting the decrease in
depletion expense. The cumulative effect of this change in
accounting principle resulted in a first quarter 1994
adjustment of $16,772,698 or $(2.54) per share (after
reduction for income taxes of $8,640,481), to retroactively
apply the new method, thereby reducing net income for the
six-month period ended June 30, 1994.
(4) Short-Term Bank Borrowings
The Company had available through a two bank group, a
revolving line of credit of $35,000,000 at June 30, 1995 and
$29,000,000 at December 31, 1994 bearing interest at the
banks' base rate plus 0.5% (9.5% at June 30, 1995 and 9% at
December 31, 1994), secured by the Company's interests in
certain oil and gas properties and general partner
interests. This facility also allows, at the Company's
option, draws which bear interest for specific periods at
the London Interbank Offered Rate ("LIBOR") plus 2.25%. Of
the $26,300,000 balance outstanding at June 30, 1995,
$21,000,000 was at the LIBOR plus 2.25% rate (8.41% average
rate). At December 31, 1994, $14,000,000 of the $18,600,000
outstanding was at the LIBOR plus 2.25% rates (7.875% on
$3,000,000), (8.1875% on $6,000,000), and (8.5% on
$5,000,000). The outstanding amounts under this facility
15
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
at June 30, 1995 ($26,300,000) and at December 31, 1994
($18,600,000) were borrowed primarily to fund the advance
purchase of producing properties on behalf of affiliated
partnerships and/or joint ventures to be subsequently
reimbursed and to fund the Company's working capital and
capital expenditures needs. Using proceeds from the common
stock offering received on July 31, 1995, this revolving
line of credit was repaid in its entirety.
The terms of the revolving line of credit include,
among other restrictions, a limitation on the level of cash
dividends (not to exceed $424,000 in any fiscal year),
requirements as to maintenance of certain minimum financial
ratios (principally pertaining to working capital, debt, and
equity ratios) and limitations on incurring other debt.
Since inception, no cash dividends have been declared on the
Company's common stock. The Company presently intends to
continue a policy of using retained earnings for expansion
of its business. As of June 30, 1995 and December 31, 1994,
the Company was in compliance with the provisions of these
agreements. The revolving line of credit extends through
May 1, 1996.
The Company's second credit line was an Acquisition
Advance Agreement with the same two bank group, bearing
interest at the greater of (a) the bank's base rate plus 1%
or (b) the Federal Funds rate plus 1.5%, to be secured by
producing oil and gas properties acquired and held for
transfer. At December 31, 1994, $3,629,000 had been
borrowed under this agreement to fund the advance purchase
of producing properties on behalf of affiliated partnerships
and/or joint ventures which were subsequently reimbursed.
This credit agreement expired June 15, 1995.
The Company's third credit facility is an amended and
restated revolving line of credit with the lead bank for
$5,000,000 bearing interest at the bank's base rate (9% at
June 30, 1995 and 8.5% at December 31, 1994), secured by
certain Company receivables. At both June 30, 1995, and
December 31, 1994 $5,000,000 was outstanding under this
facility. This credit facility was also repaid in its
entirety using the proceeds of the common stock sale
received on July 31, 1995. This credit facility extends
through May 1, 1996.
In addition to interest on these credit facilities, the
Company pays a commitment fee to compensate the banks for
making funds available. The fee on the revolving line of
credit is calculated on the average daily remainder, if any,
of the commitment amount less the aggregate principal
amounts outstanding plus the amount of all outstanding
letters of credit during the period. The fee on the
Acquisition Advance Agreement was .5% of the amount of the
16
<PAGE>
advance. The aggregate amounts of commitment fees paid by
the Company were $23,000 for the first six months of 1995
and $150,000 for the twelve month period in 1994.
(5) Long-Term Debt
The Company's long-term debt consists of $28,750,000 of
6.5% Convertible Subordinated Debentures ("Debentures").
The Debentures were issued on June 30, 1993, and will mature
on June 30, 2003. The Debentures are convertible into
common stock of the Company by the holders at any time prior
to maturity at a conversion price of $12.27 per share,
subject to adjustment upon the occurrence of certain events.
The conversion price reflects an adjustment of the original
conversion price of $13.50 per share to reflect the 10%
stock dividend declared September 6, 1994 and distributed
September 29, 1994. Interest on the Debentures is payable
semi-annually on June 30, and December 31, commencing with
the payment made at December 31, 1993. After June 30, 1997
(or in certain circumstances after June 30, 1996), the
Debentures are redeemable for cash at the option of the
Company, with certain restrictions, at 104.55% of principal,
declining to 100.65% in 2002. Upon certain changes in
control of the Company, if the price of the Company's common
stock is not above certain levels each holder of Debentures
will have the right to require the Company to repurchase the
Debentures at the principal amount thereof, together with
accrued and unpaid interest to the date of repurchase but
after the repayment of any Senior Indebtedness, as defined.
17
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
Interest expense on the Debentures, including
amortization of debt issuance costs, totaled $989,821 for
the six-month period ending June 30, 1995. Interest expense
on the Debentures, including amortization of debt issuance
costs, totaled $1,973,931 for the twelve-month period ending
December 31, 1994.
(6) Stockholders' Equity
On September 6, 1994, the Company declared a 10% stock
dividend to shareholders of record on September 19, 1994,
which was distributed on September 29, 1994. The
transaction was valued based on the closing price ($11.00)
of the Company's common stock on the New York Stock Exchange
on September 6, 1994. As a result of the issuance of
606,262 shares of the Company's Common Stock as a dividend,
retained earnings were reduced $6,668,882, with the Common
Stock and additional paid-in capital accounts increased by
the same amount. Primary and fully diluted income (loss)
per share has been restated for all periods presented to
reflect the effect of the stock dividend.
On July 31, 1995, the Company closed the sale to the
public of 5,000,000 shares of common stock at a price of
$8.50 per share. On August 10, 1995, the underwriters
exercised their full over-allotment option and an additional
750,000 shares were sold at $8.50 per share. Net proceeds
from the offering will be used to repay outstanding
indebtedness, to finance the Company's exploration and
development activities, and to acquire producing oil and gas
properties, including limited partnership interests. Net
proceeds from these sales, before selling expenses, were
$46,115,000.
(7) Foreign Activities
Russia
On September 3, 1993, the Company signed a
Participation Agreement with Senega, a Russian Federation
joint stock company (in which the Company has an indirect
interest of less than 1%), to assist in the development and
production of reserves from two fields in Western Siberia.
The Company will receive a minimum 5% net profits interest
from the sale of hydrocarbon products from the fields for
providing managerial, technical and financial support to
Senega limited to an initial budgeted capital expenditure of
approximately $5,000,000. At June 30, 1995 the Company's
investment in Russia was approximately $5,130,000 and is
included in the unproved properties portion of oil and gas
properties.
18
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
Venezuela
The Company formed a wholly-owned subsidiary, Swift
Energy de Venezuela, C.A. for the purpose of submitting a
bid on August 5, 1993 under the Venezuelan Marginal Oil
Field Reactivation Program on the Quiriquire Unit located in
Northeastern Venezuela. Swift (together with a minority
interest holder) was one of six bidders on the Quiriquire
Unit. The Company did not win the bid for the Quiriquire
Unit; however, other fields and opportunities are continuing
to be evaluated in Venezuela. At June 30, 1995 the
Company's investment in Venezuela was approximately $970,000
and is included in the unproved properties portion of oil
and gas properties net of impairments of $45,668.
(8) Acquisition of Properties by Swift
During the second quarter of 1994, the Company acquired
approximately $18,100,000 of producing oil and gas
properties in a single acquisition transaction.
Approximately $12,700,000 and $3,500,000 of the properties
were transferred to affiliated partnerships formed under
the Company's SDI offering, in 1994 and 1995, respectively.
Approximately $1,900,000 of the properties were retained by
the Company for its own account.
19
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction
with the Company's Consolidated Financial Statements and
Notes thereto.
General
The Company has historically financed most of its
growth with capital raised through limited partnership
financing, having raised approximately $440 million through
limited partnership financing from 1979 through 1994.
Beginning in 1985, the Company increasingly emphasized this
financing vehicle thereby enabling the Company to accelerate
its growth and purchase larger producing properties.
Commencing in 1991, the Company began to reduce its reliance
on limited partnership financing as its reserve base
expanded and its strategy shifted to re-emphasize
internally-generated exploration and development activities.
The Company intends to continue to reduce its dependence on
limited partnership financing.
The Company's revenue is primarily comprised of the
following components: oil and gas sales attributable to
properties in which the Company owns a direct or indirect
interest and supervision fees generated by the Company's
role as operator of approximately 750 producing and drilling
wells. Additionally, prior to 1994, the Company also
recorded earned interests and fees from limited partnerships
and joint ventures. Effective January 1, 1994, the Company
changed its revenue recognition policy for earned interests.
The cumulative effect in 1994 of this change in accounting
principle resulted in a one-time accounting adjustment of
$16.8 million, or a loss of $2.52 per share (after reduction
for income taxes of $8.6 million), from applying the new
method retroactively. Earned interests represented revenues
in the form of interests in proved developed oil and gas
properties conveyed to limited partnerships and joint
ventures formed in connection with the Company's
organization and management of limited partnerships and
joint ventures, representing the difference between the
Company's capital contributions to each limited partnership
or joint venture and its earned revenue interest in the
limited partnership's or venture's properties (based upon
the expected levels of cash distributions to the limited
partners or joint ventures). Under the Company's newly
adopted method of accounting for earned interests, such
amounts will not be recognized as income, thereby reducing
the Company's investment in oil and gas property. The
Company believes the change in policy results in financial
statements that better reflect its current business focus
and that are more comparable to current practices in the oil
and gas exploration and production industry.
20
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In May 1992, the Company purchased interests in certain
wells from the Manville Corporation for $13.8 million using
funds provided by the Company's sale of the Volumetric
Production Payment in these properties to a subsidiary of
Enron Corp. Net proceeds from the sale of the production
were recorded as deferred revenues. Deliveries under the
Volumetric Production Payments are recorded as oil and gas
sales revenues which are offset by a corresponding reduction
of deferred revenues. Under this arrangement, the Company
is required to deliver a fixed quantity of hydrocarbons
produced from the properties over specified periods through
October 2000. Volumes remaining to be delivered under the
Volumetric Production Payment are not included in the
Company's proved reserves. Under the Volumetric Production
Payment, hydrocarbons produced in excess of the amount
required to be delivered are sold by the Company for its own
account.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has relied on limited
partnership capital as its principal financing vehicle to
fund its acquisitions. Since 1991, the Company's strategy
has shifted toward increased reliance on exploration and
development activities, and it has significantly expanded
reserves added through these efforts. As a result, the
Company has reduced its reliance on cash flow generated
from, and capital raised through, limited partnerships.
Supplemental cash and working capital are provided through
internally generated cash flow and debt and equity
financing.
Net Cash From Operations
For the six-month period ended June 30, 1995, cash
flows from operating activities decreased slightly to
$4,809,931 as compared to $4,936,428 during the first six
months of 1994. The six-month 1995 decrease of $126,497 was
primarily due to average gas prices received being 22% lower
than a year earlier, as discussed below.
21
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financing Activities
On July 31, 1995, the Company closed the sale to the
public of 5,000,000 shares of common stock at a price of
$8.50 per share. On August 10, 1995, the underwriters
exercised their full over-allotment option and an additional
750,000 shares were sold at $8.50 per share. Net proceeds
from the offering will be used to repay outstanding
indebtedness, to finance the Company's exploration and
development activities, and to acquire producing oil and gas
properties, including limited partnership interests. Net
proceeds from these sales, before selling expenses, were
$46,115,000.
On June 30, 1993, the Company issued $28,750,000 of
Convertible Subordinated Debentures (Debentures) due
June 30, 2003, in a public offering. Proceeds of the
offering have been used primarily to acquire producing oil
and gas properties and to finance the Company's expanding
exploration and development programs. The principal terms
of these Debentures are described in Note 5 to the Company's
condensed financial statements included herein.
The Company offers interests in oil and gas production
partnerships under its Swift Depositary Interests (SDI),
offering and since late 1993 has offered private
partnerships formed to drill for oil and gas. The Company
does not intend to extend the SDI program past its current
offering period, which ends April 30, 1996, and will
continue to evaluate the market for the SDI program in the
interim period. Due to market conditions, the formation of
the first two SDI partnerships to be organized during 1995
was delayed from the end of the first quarter until April
28, 1995, with total subscriptions of approximately
$7,000,000. Under the second two partnerships anticipated
to be organized prior to year-end 1995, approximately
$1,500,000 had been raised through June 30, 1995. These
amounts compare to funds raised through six months ended
June 30, 1994 of $16,400,000. On March 15, 1995, and on
August 1, 1995, the Company closed its third and fourth
drilling partnership formed since 1993, with $8,900,000 of
subscriptions ($5,000,000 in the third partnership and
$3,900,000 in the fourth). The Company anticipates that it
will continue to offer the drilling partnerships for the
foreseeable future.
At June 30, 1995, limited partnership formation and
marketing costs (which under the current offerings are borne
by the Company as part of the Company's general partner
contribution) amounted to $2,901,928, a decrease of $89,945,
when compared with the December 31, 1994 balance.
22
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Credit Facilities
The Company has established credit facilities which
have been used principally to finance the Company's purchase
of producing oil and gas properties on an interim basis
pending transfer of the properties to newly formed
partnerships and joint ventures, and to provide working
capital. More recently the Company's credit facilities have
been used to fund a portion of the Company's exploration and
development activities. However, the recent stock offering
will be used to finance this activity in the near term and
allowed the Company to pay off these credit facilities. The
principal terms and restrictions of these credit facilities
are described in Note 4 to the Company's condensed financial
statements included herein.
At December 31, 1994, the Company had $27,229,000
outstanding under these borrowing arrangements. The credit
facilities were used to finance approximately $8,000,000 of
producing oil and gas property purchases. Approximately
$4,500,000 of these properties were placed into partnerships
at December 31, 1994, as reflected in the "Associated
limited partnerships and joint ventures" receivable account
on the balance sheet. The Company received reimbursement
for that amount in January 1995. The remaining $3,500,000
of these properties are reflected at December 31, 1994 in
the "Producing oil and gas properties held for transfer"
account on the balance sheet. The Company used the
remainder of the outstanding balance on the credit
facilities, along with internally generated cash flow,
principally to fund the Company's capital expenditures in
1994, and to a lesser extent, to provide working capital.
At June 30, 1995, the Company had $31,300,000
outstanding under these borrowing arrangements. The
$4,071,000 borrowed since year-end was primarily used to
fund a substantial portion of the Company's six-month 1995
capital expenditures described below. However, this entire
$31,300,000 balance has been repaid through the use of the
Company's recent stock offering proceeds.
23
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Working Capital
The Company's working capital deficit has increased
over the last six months, from working capital deficit of
$13,137,441 at December 31, 1994 to a working capital
deficit of $20,668,492 at June 30, 1995. This decrease is
primarily the result of the investment of a portion of
current working capital into oil and gas property assets as
described under capital expenditures below, intended to
increase the Company's revenues from oil and gas sales, and
in turn the Company's cash flow from operations in future
periods. However, as a result of using a portion of the
$46,115,000 of net proceeds, before selling expenses, from
the recent common stock offering to repay the Company's
credit facilities, the Company currently now has positive
working capital.
Due to the nature of the Company's business highlighted
above, the individual components of working capital
fluctuate considerably from period to period. Balance sheet
changes in receivables, producing oil and gas properties
held for transfer and payables related to producing oil and
gas property acquisitions principally arise from the timing
of property purchases and payments made by and to the
Company related to the Company's management of limited
partnerships. The Company incurs significant working
capital requirements in connection with its role as operator
of approximately 750 producing wells and the management of
affiliated partnerships. In this capacity, the Company
is responsible for certain day to day cash management,
including the collection and disbursement of oil and gas
revenues and related expenses.
24
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Expenditures
Additions to property, plant and equipment during the
first six months of 1995 were $12,572,148. These capital
expenditures include: (a) $4,800,000 of drilling costs, both
exploratory and developmental; (b) $3,400,000 of prospect
costs (principally prospect leasehold, seismic and
geological costs of unproved prospects for the Company's
account); (c) $2,400,000 to fund the Company's general
partner capital contribution to the partnerships formed
under its limited partnerships; (d) $1,300,000 invested in
foreign business opportunities in Russia (approximately
$1,100,000) and in Venezuela (approximately $200,000), as
described in Note 7 to the Company's condensed financial
statements included herein; (e) $300,000 to acquire
producing properties and (f) $400,000 spent for furniture
and fixtures, primarily computer equipment. In the
remaining six months of 1995, the Company expects capital
expenditures to be approximately $24,000,000, including
investments in all areas in which investments were made
during the first half of the year as described above, with a
particular increase and focus on exploration and development
drilling. The Company now has plans to participate in the
drilling of 85 gross wells this year, compared to 44 wells
in 1994. Sixteen of the wells planned for drilling in 1995
will be classified as exploratory. Through June 30, 1995,
the Company has drilled 23 wells.
The Company believes that 1995 anticipated internally
generated cash flows (expected to increase as the Company's
production base increases as a result of its accelerated
drilling program) together with the $46,115,000 net
proceeds, before selling expenses, from the sale of
5,750,000 shares of common stock and its existing credit
facilities, will be sufficient to finance the costs
associated with its currently budgeted capital expenditures
at least through 1996. Further liquidity needs may also be
met by additional availability under its credit facilities
based upon the value of the Company's proved reserves, as
management continually evaluates future use of debt and/or
equity to finance its capital needs.
25
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-
Six Months Ended June 30, 1995 and 1994
Net income of $1,255,875 and earnings per share of
$0.19 for the first half of 1995 were 45% lower than "Income
before cumulative effect of change in accounting principle"
of $2,286,799 and earnings per share of $0.35 in the same
period for 1994. Lower net income primarily reflected the
effect on revenues of substantially lower gas prices. The
six-month 1994 net loss of $14,485,899 included a cumulative
effect of a change in accounting principle (see Note 3 to
the Company's condensed financial statements included
herein) of $16,772,698.
Revenues
Oil and Gas Sales. Oil and gas sales increased 3% to
$9,742,473 in the first six months of 1995, compared to
$9,479,306 for the comparative period in 1994. The 24%
increase in oil production and the 7% increase in gas
production were primarily the result of production from
exploratory and developmental wells drilled in late 1994 and
in the first half of 1995, and the acquisition of interests
in producing properties by the Company for its own account
in the third quarter of 1994. These increases were offset
somewhat by declining production derived through the
Company's general partner interests in its limited
partnerships. The Company's net sales volume (including the
volumetric production payment) in the first half of 1995
increased by 12% or 529,972 Mcfe (thousand cubic feet
equivalent) over volumes in the comparable 1994 period;
however, due to lower gas prices received, oil and gas sales
revenues increased only 3%. Partially offsetting the effect
of the 22% decrease in gas prices were oil price increases
of 21% (comparing average prices received over the
respective six-month periods).
Oil and gas sales comprised 76% and 77%, respectively
of total revenues for the first six months of 1995 and 1994.
The majority of these revenues were derived from the sale of
the Company's gas production. The Company expects oil and
gas sales to continue to increase as a direct consequence of
the addition of oil and gas reserves through the Company's
active drilling programs.
26
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides additional information
regarding the Company's oil and gas sales.
<TABLE>
<CAPTION>
NET SALES VOLUME AVERAGE SALES PRICE
------------------- ----------------------
Oil(Bbls) Gas(Mcf) Oil(Bbl) Gas(Mcf)
<S> <C> <C> <C> <C>
1994:
----
3 MONTHS
ENDED 3/31/94 99,992 1,643,348 $11.80 $2.21
3 MONTHS
ENDED 6/30/94 105,854 1,582,699 $14.47 $1.98
------- ---------
6 MONTHS
ENDED 6/30/94 205,846 3,226,047 $13.17 $2.10
======= =========
1995:
----
3 MONTHS
ENDED 3/31/95 134,626 1,702,658 $15.61 $1.63
3 MONTHS
ENDED 6/30/95 121,551 1,751,375 $16.36 $1.64
------- ---------
6 MONTHS
ENDED 6/30/95 256,177 3,454,033 $15.97 $1.64
======= =========
</TABLE>
Supervision Fees. Supervision fees decreased 2% in the
first six months of 1995 compared to the same period in 1994
due primarily to a reduction in the number of wells the
Company operated, as it disposed of certain marginal wells
between the periods.
Expenses
General and administrative expenses for the first
six months of 1995 increased $335,759 or 14% when compared
to the same period in 1994, primarily due to increased
staffing levels which occurred in the second half of 1994 to
support the Company's increased reserve base and drilling
activities. The Company's general and administrative
expenses increased from $0.54 per Mcfe produced for the
first half of 1994 to $0.55 per Mcfe produced for the same
period in 1995.
Depreciation, depletion and amortization ("DD&A")
increased 15%, due primarily to the increase in the
Company's producing properties and the related sale of
increased quantities of oil and gas therefrom. DD&A grew
from $0.78 per Mcfe produced in the 1994 period to $0.80 per
Mcfe produced in the 1995 period, reflecting variations in
the per unit cost of property additions and changes in the
mix of reserves.
27
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Oil and gas production costs increased 41% in the first
half of 1995 (such costs increased from $0.53 per Mcfe
produced in 1994 to $0.67 per Mcfe produced in 1995) due to
the growth in the Company's production volumes, certain one-
time remedial well expenses, and higher well insurance costs
and ad valorem taxes.
Interest expense for the first six months of 1995 on
the Debentures, including amortization of debt issuance
costs, totaled $989,820, while interest expense on the
credit facilities, including commitment fees, totaled
$1,309,284 for a total of $2,299,104 (of which $1,208,780
was capitalized). The Company capitalizes that portion of
interest related to its exploration, partnership and foreign
business development activities. This compares to interest
expense on the Debentures for the first six months of 1994,
totaling $986,034, including amortization of debt issuance
costs, while interest expense on the credit facilities,
including commitment fees, totaled $451,374 for a total of
$1,437,408 (of which $676,005 was capitalized). The
increase in interest expense in 1995 is attributable to an
increase in the average balance under the Company's credit
lines necessary to finance the Company's capital
expenditures as discussed above. The Company expects
interest expense to be significantly reduced for the
remainder of the year as a portion of the proceeds from the
sale of 5,750,000 shares of common stock received in July
and August, 1995 was used to pay down the credit lines.
RESULTS OF OPERATIONS-
Three Months Ended June 30, 1995 and 1994
Net income of $731,275 and earnings per share of $0.11
in the second quarter of 1995 decreased 32% when compared to
net income of $1,076,077 and earnings per share of $0.16 in
the same period for 1994. Lower net income primarily
reflected the effect on revenues of substantially lower gas
prices and also the effect on earnings of increased costs
and expenses, as discussed below.
Revenues
Oil and Gas Sales. Oil and gas sales increased 4% to
$4,866,432 in the second quarter of 1995, compared to
$4,662,036 for the comparative period in 1994. The 15%
increase in oil production and the 11% increase in gas
production were primarily the result of production from
exploratory and developmental wells drilled in late 1994 and
in the first half of 1995, and the acquisition of interests
in producing properties by the Company for its own account
in the third quarter of 1994.
28
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's net sales volume (including the
volumetric production payment) in the second quarter of 1995
increased by 12% (262,858 Mcfe) over volumes in the
comparable 1994 period, however, due to lower gas prices
received, oil and gas sales revenues increased only 4%.
Partially offsetting the effect of the 17% decrease in gas
prices were oil price increases of 13% (comparing average
prices received over the respective three-month periods).
Supervision Fees. Supervision fees increased 1% in the
second quarter of 1995 when compared to the same period in
1994 due primarily to the increase in drilling activity
between the periods, which resulted in a increase in the
drilling overhead component of supervision fees.
Expenses
General and administrative expenses for the second
quarter of 1995 increased $224,325 or 18% when compared to
the same period in 1994, primarily due to increased staffing
levels which occurred in the second half of 1994 to support
the Company's increased reserve base and drilling
activities. The Company's general and administrative
expenses increased from $0.55 per Mcfe produced for the
second quarter of 1994 to $0.58 per Mcfe produced for the
same period in 1995.
Depreciation, depletion and amortization increased 2%,
due to the increase in the Company's producing properties
and the related sale of increased quantities of oil and gas
therefrom. DD&A did however decrease from $0.81 per Mcfe
produced in the 1994 period to $0.74 per Mcfe produced in
the 1995 period, reflecting positive variations in the per
unit cost of property additions and changes in the mix of
reserves.
Oil and gas production costs increased 40% in the
second quarter of 1995 (such costs increased from $0.55 per
Mcfe produced in 1994 to $0.69 per Mcfe produced in 1995)
due to the growth in the Company's production volumes,
certain one-time remedial well expenses, and higher well
insurance costs and ad valorem taxes.
29
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest expense for the second quarter of 1995 on the
Debentures, including amortization of debt issuance costs,
totaled $494,910, while interest expense on the credit
facilities, including commitment fees, totaled $655,583 for
a total of $1,150,493 (of which $537,950 was capitalized).
This compares to interest expense on the Debentures for the
second quarter of 1994, totaling $493,017, including
amortization of debt issuance costs, while interest expense
on the credit facilities, including commitment fees, totaled
$258,015 for a total of $751,032 (of which $348,604 was
capitalized). This second quarter increase in interest
expense in 1995 is attributable to an increase in the
average balance under the Company's credit lines necessary
to finance the Company's capital expenditures as discussed
above.
30
<PAGE>
SWIFT ENERGY COMPANY
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings - N/A
Item 2. Changes in Securities - N/A
Item 3. Defaults Upon Senior Securities - N/A
Item 4. Submission of Matters to a Vote of Security
Holders -
A. The Company's annual meeting of shareholders was held
on May 9, 1995. At the record date, 6,685,138 shares
of Common Stock were issued and outstanding and
entitled to one vote per share upon all matters
submitted at the meeting. At the annual meeting all
seven nominees were elected to serve as Directors of
the Company until the next annual meeting of
shareholders. The results of the vote were as follows:
NOMINEES FOR DIRECTORS FOR AGAINST ABSTENTIONS
---------------------- --------- ------- -----------
A. Earl Swift 5,585,460 30,150 1,069,528
Virgil N. Swift 5,585,460 30,150 1,069,528
Raymond O. Loen 5,585,460 30,150 1,069,528
Henry C. Montgomery 5,583,150 32,460 1,069,528
Clyde W. Smith, Jr. 5,583,260 32,350 1,069,528
Harold J. Withrow 5,584,250 31,360 1,069,528
G. Robert Evans 5,583,260 32,350 1,069,528
B. Further, at the annual meeting shareholders approved
the Company's 1990 Stock Compensation Plan, as amended,
to increase the maximum number of shares of common
stock which can be covered by options held by any one
non-employee director by 30,000 shares to a total of
60,000 shares per director. The results of the vote
were as follows:
FOR AGAINST ABSTENTIONS
4,760,196 457,892 1,467,050
Item 5. Other Information - N/A
Item 6. Exhibits & Reports on Form 8K - None
31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY COMPANY
(Registrant)
Date: August 11, 1995 By:(Original Signed By)
------------------------------
John R. Alden
Sr.Vice President, Secretary/
Principal Financial Officer
Date: August 11, 1995 By:(Original Signed By)
------------------------------
Alton D. Heckaman, Jr.
Vice President,
Controller and Principal
Accounting Officer
32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY COMPANY
(Registrant)
Date: August 11, 1995 By:________________________
John R. Alden
Sr. Vice President, Secretary/
Principal Financial Officer
Date: August 11, 1995 By:________________________
Alton D. Heckaman, Jr.
Vice President,
Controller and Principal
Accounting Officer
33
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
filer's balance sheet and statement of operations as of June 30, 1995,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,848,864
<SECURITIES> 0
<RECEIVABLES> 31,223,386
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,029,904
<PP&E> 124,313,062
<DEPRECIATION> 25,367,386
<TOTAL-ASSETS> 136,272,606
<CURRENT-LIABILITIES> 51,698,396
<BONDS> 0
<COMMON> 67,564
0
0
<OTHER-SE> 43,908,012
<TOTAL-LIABILITY-AND-EQUITY> 136,272,606
<SALES> 9,742,473
<TOTAL-REVENUES> 12,823,498
<CGS> 0
<TOTAL-COSTS> 7,339,230<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,090,324
<INCOME-PRETAX> 1,641,882
<INCOME-TAX> 386,007
<INCOME-CONTINUING> 1,255,875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,255,875
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
<FN>
<F1>Includes depreciation, depletion and amortization and oil and gas production
costs. Excludes general and administrative and interest expense.
</FN>
</TABLE>
