SWIFT ENERGY COMPANY
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(713) 874-2700
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 9, 1995
Notice is hereby given that the annual meeting of shareholders of
SWIFT ENERGY COMPANY (the "Company") will be held at the Wyndham Hotel,
12400 Greenspoint Drive, Houston, Texas, on Tuesday, May 9, 1995 at 4:00
p.m. Central Time for the following purposes:
1. To elect seven members of the board of directors to serve
until the next annual meeting of shareholders or until their
successors are elected and qualified;
2. To approve amendment of the Company's 1990 Nonqualified Stock
Option Plan to increase the number of unexercised options that
a non-employee director may hold from options covering 30,000
shares of common stock to options covering 60,000 shares; and
3. To consider and act upon such other business as may properly
be presented at the meeting, or any adjournment thereof.
A record of shareholders has been taken as of the close of business on
March 20, 1995, and only shareholders of record on that date will be
entitled to notice of and to vote at the meeting, or any adjournment
thereof. A complete list of shareholders will be available commencing
April 28, 1995, and may be inspected during normal business hours prior
to the meeting at the offices of the Company, 16825 Northchase Drive,
Suite 400, Houston, Texas.
If you do not expect to be present in person at the meeting or prefer
to vote by proxy in advance, please sign and date the enclosed proxy
card and return it promptly in the enclosed stamped envelope which has
been provided for your convenience. The prompt return of the proxy card
will ensure a quorum and save the Company the expense of further
solicitation.
By Order of the Board of Directors,
JOHN R. ALDEN
Secretary
April 11, 1995
<PAGE>
SWIFT ENERGY COMPANY
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(713) 874-2700
PROXY STATEMENT
This proxy statement is mailed to shareholders commencing on or about
April 11, 1995, in connection with the solicitation by the board of
directors of SWIFT ENERGY COMPANY (the "Company") of proxies to be voted
at the annual meeting of shareholders to be held at the Wyndham Hotel,
12400 Greenspoint Drive, Houston, Texas, on May 9, 1995 at 4:00 p.m.
Central Time, and any adjournment thereof, for the purposes set forth in
the accompanying notice. Management does not expect that any matters
other than those referred to in such notice will be presented for action
at the meeting.
The Annual Report to Shareholders covering the fiscal year ended
December 31, 1994, will be mailed to each shareholder entitled to vote
at the annual meeting on or before the date of mailing this proxy
statement.
The cost of soliciting proxies in the accompanying form will be borne
by the Company. In addition to solicitations by mail, a number of
regular employees of the Company may, if necessary to ensure the
presence of a quorum, solicit proxies in person or by telephone. The
Company has retained a proxy solicitor, at an estimated cost of
approximately $1,200, to assist in contacting brokers and other
"street-name" holders to encourage the return of proxies by beneficial
holders.
QUORUM AND VOTING
The record date for the determination of shareholders entitled to
notice of and to vote at the annual meeting was the close of business on
March 20, 1995. On the record date, there were 6,685,138 shares of
common stock of the Company, par value $.01 per share, outstanding and
entitled to vote.
Each share of common stock entitles the holder to one vote on each
matter presented at the meeting. Proxies will be voted in accordance
with the directions specified thereon and otherwise in accordance with
the judgment of the persons designated as proxies. Any proxy on which
no direction is specified will be voted for the election of all nominees
named therein to the board of directors, in favor of the amendment to
the 1990 Nonqualified Stock Option Plan (the "1990 Nonqualified Plan"),
and otherwise at the discretion of the persons designated as proxies. A
shareholder may revoke his proxy at any time prior to the voting thereof
by attending and voting at the meeting or by filing with the Secretary
of the Company a written revocation or a duly executed proxy bearing a
later date.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares entitled to be voted at the meeting is necessary
to constitute a quorum to transact business. If a quorum is not present
or represented at the annual meeting, a majority of the votes
represented at the meeting may adjourn the annual meeting from time to
time without notice other than an announcement until a quorum is present
or represented.
An automated system administered by the Company's transfer agent
tabulates the votes. Abstentions are included in the determination of
the number of shares present and voting and are counted as abstentions
in tabulating the votes cast on nominations or proposals presented to
shareholders. Broker nonvotes are not included in the determination of
the number of shares present and voting or as a vote with respect to
such nominations or proposals.
ELECTION OF DIRECTORS
At the annual meeting, seven directors are to be elected, each
director to hold office until the next annual meeting of shareholders or
until his successor is elected and qualified. In order to be elected,
each nominee for director must receive at least the number of votes
equal to the majority of the shares represented at the meeting, either
in person or by proxy.
The persons named in the accompanying proxy have been designated by
the board of directors, and unless authority is withheld, they intend to
vote for the election of the nominees named below to the board of
directors. All seven nominees are currently members of the board of
directors. If any nominee should become unavailable or unable to serve
as a director, the proxy may be voted for a substitute selected by
persons named as proxies or the board may be reduced accordingly;
however, the board of directors is not aware of any circumstances likely
to render any nominee unavailable.
There are currently seven positions on the Company's board of
directors, and seven nominees are being proposed for election at the
annual meeting.
Nominees
Set forth below is certain information, as of the date hereof,
concerning the nominees for election to the board of directors of the
Company.
A. Earl Swift, 61, is President, Chief Executive Officer and Chairman
of the Board of Directors of the Company and has served in such capacity
since its founding in 1979. For the 17 years prior to 1979, he was
employed by affiliates of American Natural Resources Company, serving
his last three years as Vice President of Exploration and Production for
Michigan-Wisconsin Pipe Line Company and American Natural Gas Production
Company. Mr. Swift is a registered professional engineer and holds a
degree in Petroleum Engineering, a Juris Doctor degree and a Master's
degree in Business Administration. He is the brother of Virgil N. Swift
and the father of Terry E. Swift.
Virgil N. Swift, 66, has been a director of the Company since 1981,
and has acted as Vice Chairman of the Board and Executive Vice
President--Business Development since November 1991. He previously
served as Executive Vice President and Chief Operating Officer from 1982
to November 1991. Mr. Swift joined the Company in 1981 as Vice
President--Drilling and Production. For the preceding 28 years he held
various production, drilling and engineering positions with Gulf Oil
Corporation and its subsidiaries, last serving as General Manager--
Drilling for Gulf Canada Resources, Inc. Mr. Swift is a registered
professional engineer and holds a degree in Petroleum Engineering.
G. Robert Evans, 63, has been a director of the Company since 1994.
Since 1991, he has been Chairman and Chief Executive Officer of Material
Sciences Corporation of Elk Grove Village, a corporation that develops
and commercializes continuously processed, coated materials
technologies. He is also currently serving as a director of three other
public companies: Consolidated Freightways, Inc. (transportation),
Fibreboard Corporation (wood products, insulation and resort operations)
and Elco Industries (manufacturing). From 1990 until 1991, he served as
President, Chief Executive Officer and a Director of Corporate Finance
Associates of Illinois, Inc., a financial intermediary and consulting
firm. From 1987 until 1990, he served as President, Chief Executive
Officer and a Director of Benrose Group USA, a British holding company
engaged in value-added manufacturing and sale of products to the
advertising specialty industry.
Raymond O. Loen, 70, has served as a director of the Company since its
founding in 1979. Since 1963, he has been President of R.O. Loen
Company, a privately held management consulting firm headquartered in
Lake Oswego, Oregon.
Henry C. Montgomery, 59, has served as a director of the Company since
1987. Since 1980, Mr. Montgomery has been the Chairman of the Board of
Montgomery Financial Services Corporation, a management consulting and
financial services firm. Mr. Montgomery also currently serves as a
director of Southwall Technology Corporation, a public company engaged
in the design and manufacture of thin-film coatings, and of Catalyst
Semiconductor, Inc., Santa Clara, California, a public company which
designs, manufactures and sells semiconductors. Mr. Montgomery
previously served as Chairman of the Board of each of Private Financial
Services Corporation, a management consulting and financial services
firm (1986 to 1989), and Aquanautics Corporation, a public company
involved in the extraction of oxygen from water and air (1986 to 1991).
Clyde W. Smith, Jr., 46, has served as a director of the Company since
1984. He has served as President of Somerset Properties, Inc., a real
estate and investment company, since 1985, and as President of AdVision,
Inc., which markets video display merchandising systems, since 1988.
Mr. Smith formerly acted as Chief Executive Officer of California Video
Sales, Inc. from 1987 to 1990.
Harold J. Withrow, 67, has been a director of the Company since 1988.
Mr. Withrow has been an independent oil and gas consultant since 1988.
From 1975 until 1988, Mr. Withrow served as Senior Vice President-Gas
Supply for Michigan Wisconsin Pipe Line Company and its successor, ANR
Pipeline Company.
Compensation to Directors
Board members are reimbursed for travel expenses they incur in
attending board of directors meetings. Employees of the Company are not
compensated for serving as directors. During 1995, nonemployee members
of the board of directors will receive $1,750 per board meeting
attended, an annual fee of $5,000 for serving on committees of the
board, and an additional annual fee of $5,000 for services as a
director. Compensation paid to nonemployee directors during 1994 for
their services as directors in the form of cash and shares totaled
$78,750 (this figure includes deferred compensation payable in shares
valued at $7,325). This figure includes $3,200 paid in 1994 to former
director, William E. Dark, for services performed in 1993.
Stock Options Granted to Nonemployee Directors
Under the 1990 Nonqualified Plan, each nonemployee director is granted
options to purchase 10,000 shares of the Company's common stock on the
date he first becomes a nonemployee director. Additionally, on the day
after each annual meeting of the shareholders, each individual who is a
nonemployee director on that date is granted, subject to an option
maximum, options to purchase 5,000 shares of the Company's common stock.
See "Approval of Amendment to 1990 Nonqualified Stock Option Plan --
Summary of the Plan."
In accordance with the 1990 Nonqualified Plan, each of the nonemployee
directors (Messrs. Loen, Montgomery, Smith, Evans and Withrow) have been
granted options for shares of the Company's common stock. Due to a ten
percent stock dividend declared September 7, 1994, the number of shares
underlying all options held by each of the nonemployee directors
increased by ten percent as of such date with a commensurate 10%
decrease in the option exercise prices. None of the nonemployee
directors exercised options during the year ended December 31, 1994.
For the number of options exercisable by each of the nonemployee
directors, within 60 days of March 1, 1995, see footnote (1) to the
table set forth under "Principal Shareholders" below.
Meetings of the Board of Directors
During 1994, the board of directors met on nine occasions. In
addition, management confers frequently with its directors on an
informal basis to discuss Company affairs. During 1994, each director
attended at least 75% of (i) the total number of meetings of the board
of directors and (ii) the total number of meetings of all committees of
the board on which he served.
Committees of the Board
The board of directors of the Company has established various standing
committees, including Audit, Nominating, Compensation and Executive
Committees. A description of the functions of the these Committees is
set forth below.
Audit Committee. The Audit Committee is comprised entirely of
nonemployee directors. The Audit Committee recommends to the board of
directors the engagement of, and reviews the services performed by, the
Company's independent auditors. Messrs. Loen, Montgomery and Smith are
members of the Audit Committee, which held four meetings in 1994.
Nominating Committee. The Nominating Committee's function is to
review the performance of directors and to recommend persons to be
management's nominees for directorships. The Nominating Committee may
consider nominees recommended by shareholders, upon written request by a
shareholder addressed to any member of the committee. See "Shareholder
Proposals" herein. Messrs. A. E. Swift, Loen and Smith are members of
the Nominating Committee. The Nominating Committee held two meetings in
1994.
Compensation Committee. The Compensation Committee at all times is
comprised of at least three nonemployee directors who are "disinterested
persons" as defined in Rule 16b-3 under the Securities Exchange Act of
1934 (the "Exchange Act"). The Compensation Committee has sole
authority to administer the Company's stock option plans, although it
has no discretion as to awards of stock options under the 1990
Nonqualified Plan. The Compensation Committee also reviews and makes
recommendations regarding the compensation levels of the Company's
executive officers. Messrs. Loen, Montgomery and Withrow are members of
the Compensation Committee, which held six meetings in 1994.
Executive Committee. The Executive Committee's primary function is to
assist management in implementing corporate policy established by the
board of directors. Messrs. A. E. Swift, V. N. Swift and Withrow are
members of the Executive Committee. The Executive Committee held ten
meetings in 1994.
In addition to the foregoing, the board of directors has established a
new committee, the Special Transactions Committee, which will meet in
1995 to the extent necessary. Its primary function will be to consider
any transaction submitted to the board that would involve a fundamental
organizational or structural change for the Company and to make
recommendations to the board with respect to such transactions. The
committee's members are Messrs. Withrow, Smith and Montgomery.
Compliance with Section 16 of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered
class of the Company's equity securities, to file with the Securities
and Exchange Commission, the New York Stock Exchange and the Pacific
Stock Exchange initial reports of ownership and reports of changes in
ownership of common stock of the Company. Officers, directors and
greater than 10% shareholders are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
Forms 3 and 4 furnished to the Company during the fiscal year beginning
January 1, 1994, and ending December 31, 1994, and Forms 5 furnished to
the Company with respect to such fiscal year, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater
than 10% beneficial owners were complied with, except as noted below.
Messrs. Withrow, Smith, Loen and Montgomery and Messrs. Terry E. Swift,
Alden, Kitterman, and Vincent inadvertently failed to include in their
Forms 5 stock options granted under a Rule 16b-3 plan in May and June of
1994. All of the foregoing except Messrs. Withrow and Smith timely
filed their Forms 5 by February 14, 1995, but reported such granting of
stock options by amendments to their Forms 5. Mr. A. Earl Swift filed
an amendment to his timely filed Form 5 to report a sale of shares by
his wife, which he had previously given to her.
APPROVAL OF AMENDMENT
TO 1990 NONQUALIFIED STOCK OPTION PLAN
On August 1, 1994, the board of directors of the Company, subject to
approval by the shareholders of the Company, approved an amendment to
increase the maximum number of shares of common stock which can be
covered by options held by any one nonemployee director (the "Option
Maximum") by 30,000 shares to a total of 60,000 shares per director.
The amendment will allow nonemployee directors to continue to receive
annual automatic option grants (covering 5,000 shares of common stock
per year) and will enable the Company to continue the purposes of the
1990 Nonqualified Plan by providing continuing incentives to retain
qualified nonemployee directors.
The 1990 Nonqualified Plan was originally adopted and approved by the
Company's shareholders in 1990. The purposes of the 1990 Nonqualified
Plan are to retain persons of training, experience and ability as
independent directors on the board of directors in order to encourage
the sense of proprietorship of such persons, and to stimulate the active
interests of such persons in the development and financial success of
the Company.
If approved by the shareholders at the annual meeting, the first
sentence of Section 3(c) of the 1990 Nonqualified Plan will be amended
to provide as follows (change indicated by italics):
"Notwithstanding any provision herein to the contrary, no Director
shall be automatically granted any Option which, if considered
together with all other outstanding and unexercised options granted
by the Company hereunder or pursuant to any other Company Plan
("Outstanding Options"), would entitle such Director to purchase
more than 60,000 shares of the Company's common stock ("Option
Maximum")."
The remaining language of Section 3(c) and the remainder of the 1990
Nonqualified Plan will not be changed and the only effect of the
amendment will be to increase the Option Maximum that may be granted to
nonemployee directors. Under the 1990 Nonqualified Plan shareholder
approval is required so that the 1990 Nonqualified Plan can continue to
qualify under Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act. Rule 16b-3 provides an exemption
from the operation of the "short-swing profit" recovery provisions of
Section 16(b) of the Exchange Act, with respect to the acquisition and
exercise of stock options, and use of already owned shares for payment
for the exercise price of stock options.
Copies of the 1990 Nonqualified Plan as filed with the Securities and
Exchange Commission may be obtained by shareholders without charge by
writing to the Company at 16825 Northchase Drive, Suite 400, Houston,
Texas 77060, Attention: John R. Alden, or calling (713) 874-2700.
Increase in the Option Maximum.
The board is proposing to increase the number of shares of common
stock for which an independent director may be granted options from an
Option Maximum of 30,000 shares to an Option Maximum of 60,000 shares.
Each nonemployee director, with the exception of Mr. Evans, has stock
underlying options, including shares resulting from the 10% stock
dividend in September 1994 and from grants under the 1990 Nonqualified
Plan and a predecessor stock option plan, covering in excess of 30,000
shares per nonemployee director. Unless the Option Maximum is
increased, these directors would be precluded from receiving further
option grants.
Summary of the 1990 Nonqualified Plan
Under the Company's 1990 Nonqualified Plan, each nonemployee director
is granted options to purchase 10,000 shares of the Company's common
stock on the date of first becoming a nonemployee director.
Additionally, on the day after each annual meeting of the shareholders,
each individual who is a nonemployee director on that date is
automatically granted options to purchase 5,000 shares of the Company's
common stock. A grant of options to a nonemployee director is reduced
to the extent that it would cause that director to hold unexercised
options which, when added to all other outstanding and unexercised
options granted by the Company pursuant to the 1990 Nonqualified Plan or
any other Company plan, would entitle such director to purchase more
than 30,000 shares of the Company's common stock. On the date on which
the automatic grant of options under the 1990 Nonqualified Plan would
exceed the Option Maximum for a director, the number of shares with
respect to which options are automatically granted are reduced or
eliminated so that the director's shares of all Company stock covered by
outstanding options do not exceed the Option Maximum. If a director
subsequently exercises any of his outstanding options to purchase shares
of the Company's stock, the shares so purchased are no longer considered
to be outstanding options for purposes of the Option Maximum. Options
automatically granted under the 1990 Nonqualified Plan (i) have an
exercise price equal to the highest closing price of the Company's
common stock on any established national exchange on the date of grant,
(ii) are for a term of 10 years from the date of grant, and (iii) become
exercisable for 20% of the shares covered thereby on each of the first
five anniversaries of the date of grant.
Shares Subject to 1990 Nonqualified Plan. The maximum number of
shares of common stock with respect to which options may be granted
under the 1990 Nonqualified Plan is currently 165,000, (which has been
increased from 150,000 to reflect the 10% stock dividend in September
1994), subject to adjustment in the event of a reorganization, stock
split, stock dividend, merger, consolidation or other change in the
capitalization of the Company. No options are assignable or
transferrable by a nonemployee director except upon death, to his
beneficiaries. During the lifetime of a nonemployee director, options
are exercisable only by the nonemployee director or his legal
representative.
Change of Control. In the event of a change of control of the Company
as a result of a tender offer, business combination or other events
described in the 1990 Nonqualified Plan, all options then outstanding at
least one year shall become fully exercisable.
Amendment. The Board may amend or terminate the 1990 Nonqualified
Plan without shareholder approval at any time except that, to comply
with the restrictions set forth in Rule 16b-3 of the Exchange Act, and
to comply with the Internal Revenue Code of 1986, as amended, (the
"Code") and accompanying regulations, the Board must obtain approval of
the shareholders to make any amendment that would (i) increase the
aggregate number of shares of stock that may be issued under the 1990
Nonqualified Plan (except for certain adjustments), (ii) modify
materially the requirements as to eligibility for participation in the
1990 Nonqualified Plan, or (iii) increase materially the benefits
accruing to the optionees under the 1990 Nonqualified Plan.
Awards Under Plan To Date
The following table presents information regarding awards of stock
options under the 1990 Nonqualified Plan from its inception through
December 31, 1994, to nonemployee directors and the total number held
under all Company plans.
<TABLE>
<CAPTION>
Shares of Common
Stock Underlying Total Shares of Common
Options Granted Under Stock Underlying Options
Name 1990 Nonqualified Plan Granted Under all Plans (1)
<S> <C> <C>
G. Robert Evans 11,000 11,000
Raymond O. Loen 22,000 33,000
Henry C. Montgomery 17,050 33,000
Clyde W. Smith, Jr. 22,000 30,800
Harold J. Withrow 17,600 33,000
</TABLE>
(1) The total number of shares of common stock underlying all options
includes shares underlying options granted under a predecessor
nonqualified plan. The total number of underlying shares for all
options granted has been increased to reflect a ten percent (10%)
stock dividend payable to the Company's shareholders of record on
September 19, 1994. Although the stock dividend increased the
total number of shares of common stock covered by options held by
Messrs. Loen, Montgomery, Smith and Withrow above the Option
Maximum, this increase did not violate the 1990 Nonqualified Plan
because options were not granted under the 1990 Nonqualified
Plan, but rather, resulted from a stock dividend.
Board of Directors' Recommendation
The affirmative vote of a majority of the shares represented at the
1995 annual meeting of shareholders in person or by proxy will be needed
to approve the amendment to the 1990 Nonqualified Plan. The Board
believes that increasing the Option Maximum is important in helping the
Company to continue to retain qualified nonemployee directors.
Management believes that the approval of the amendment to the 1990
Nonqualified Plan will contribute to the continuation of the Company's
history of success and stability. All of the executive officers and
directors of the Company have expressed their intent to vote in favor of
the amendment to the 1990 Nonqualified Plan. At March 20, 1995, the
record date for the annual meeting, such executive officers and
directors owned approximately 15% of the Company's issued and
outstanding shares of common stock.
The adoption of the proposed amendment to the 1990 Nonqualified Plan
is viewed as appropriate in light of the increase in the Company's
issued and outstanding common stock since 1990. The 30,000 share
maximum in place since 1990 and the 60,000 share maximum proposed in
this amendment both represent less than 1% of the Company's issued and
outstanding common stock at the time of the 1990 Nonqualified Plan's
adoption and as of the date hereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE IN FAVOR OF
APPROVING THE AMENDMENT TO THE 1990 NONQUALIFIED PLAN.
PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the
shareholdings, as of March 1, 1995, of the seven current members of the
board of directors (all of whom are nominees for re-election), each of
the Company's five most highly compensated executive officers, all
executive officers and directors as a group, and each person who
beneficially owned more than five percent of the Company's outstanding
common stock.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned at
March 1, 1995(1)
Percent of
Class
Name of Person or Group Position Number Outstanding
<S> <C> <C> <C>
A. Earl Swift . . . . . . . . Chairman of the Board, President, 310,417(2) 4.6%
Chief Executive Officer
Virgil N. Swift . . . . . . . Vice Chairman of the Board, Executive
Vice President--Business Development 302,454 4.5%
G. Robert Evans . . . . . . . Director 2,000 (3)
Raymond O. Loen . . . . . . . Director 136,956(4) 2.0%
Henry C. Montgomery . . . . . Director 25,960 (3)
Clyde W. Smith, Jr. . . . . . Director 22,550 (3)
Harold J. Withrow . . . . . . Director 24,200 (3)
Terry E. Swift . . . . . . . Executive Vice President, Chief
Operating Officer 55,407 (3)
John R. Alden . . . . . . . . Senior Vice President--Finance, Chief
Financial Officer, Secretary 43,931 (3)
James M. Kitterman . . . . . Senior Vice President--Operations 34,561 (3)
All executive officers & directors as a group (12 persons) . . . . . . 1,015,072 15.2%
Foreign & Colonial Management Limited . . . . . . . . . . . . . . . . .
Hypo Foreign & Colonial Management (Holdings) Limited
Exchange House, Primrose Street
London EC2A 2NY England 417,216(5) 6.2%(5)
Dimensional Fund Advisors Inc. . . . . . . . . . . . . . . . . . . . .
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 344,560(6) 5.2%(6)
FMR Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82 Devonshire Street
Boston, Massachusetts 02109 367,158(7) 5.4%(7)
</TABLE>
(1) Unless otherwise indicated below, the persons named have sole
voting and investment power over the number of shares of the
Company's common stock shown as being owned by them. The table
includes the following shares that were acquirable within 60 days
following March 1, 1995 by exercise of options granted under the
Company's stock option plans: Mr. A. E. Swift - 36,256;
Mr. V. N. Swift - 34,408; Mr. Loen - 17,600; Mr. Smith - 15,400;
Mr. Montgomery - 22,550; Mr. Withrow - 22,000; Mr. T. E. Swift -
34,575; Mr. Alden - 30,932; Mr. Kitterman - 21,230; and all
executive officers and directors as a group - 278,190.
(2) Includes 7,358 shares held by Mr. Swift's wife.
(3) Less than one percent.
(4) Includes 14,300 shares as to which Mr. Loen, as co-trustee for an
HR-10 Retirement Plan, shares voting and investment power with
his wife; 70,000 shares held by his wife (who holds sole voting
and investment power as to those shares and 3,680 shares held in
her IRA), and 4,554 shares held in Mr. Loen's IRA.
(5) Based on a Schedule 13D dated April 26, 1993 filed with the
Securities and Exchange Commission.
(6) Based on a Schedule 13G dated January 31, 1995 filed with the
Securities and Exchange Commission. Dimensional Fund Advisors
Inc. ("Dimensional") is deemed to have beneficial ownership of
344,560 shares of the Company's stock as of December 31, 1994,
all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit
plans, for all of which Dimensional serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
Dimensional has sole voting power as to 257,950 shares and sole
dispositive power as to all 344,560 shares.
(7) Based on a Schedule 13G dated February 13, 1995 filed with the
Securities and Exchange Commission, Fidelity Management &
Research Company ("Fidelity"), a wholly-owned subsidiary of FMR
Corp., an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is deemed to be the beneficial
owner of 367,158 shares of the Company's shares as a result of
acting as an investment adviser to several investment companies
registered under Section 8 of the Investment Company Act of 1940
(the "Funds"). Edward C. Johnson 3d and Abigail P. Johnson each
own 24.9% of the outstanding voting common stock of FMR Corp.,
and various Johnson family members and trusts for the benefit of
Johnson family members own FMR Corp. voting common stock. Edward
C. Johnson 3d, FMR Corp. (through its control of Fidelity) and
the Funds each have sole power to dispose of the 367,158 shares
owned by the Funds, but neither FMR Corp. nor Edward C.
Johnson 3d, Chairman of FMR Corp., has any power to vote or
direct the voting of the shares owned directly by the Funds,
which power resides with the Funds' Boards of Trustees.
EXECUTIVE OFFICERS
The executive officers of the Company are appointed annually by the
board of directors. Information regarding A. Earl Swift, President,
Chief Executive Officer and Chairman of the Board, and Virgil N. Swift,
Executive Vice President--Business Development and Vice Chairman of the
Board, is set forth above under "Election of Directors--Nominees." Set
forth below is certain information, as of the date hereof, concerning
the other executive officers of the Company.
Terry E. Swift, 39, was appointed Executive Vice President and Chief
Operating Officer of the Company in 1991. He served as Senior Vice
President--Exploration and Joint Ventures from 1990 to 1991 and as Vice
President--Exploration and Joint Ventures from 1988 to 1990. Mr. Swift
has a degree in Chemical Engineering and a Master's Degree in Business
Administration.
John R. Alden, 49, Senior Vice President--Finance, Chief Financial
Officer and Secretary, joined the Company in 1981. Mr. Alden was
appointed to his current offices in 1990. Prior to that time he served
the Company as its principal financial officer under a variety of
titles. Mr. Alden holds a degree in Accounting and a Master's degree in
Business Administration.
Bruce H. Vincent, 47, joined the Company as Senior Vice President--
Funds Management in 1990. Mr. Vincent acted as President of Vincent &
Company, an investment banking firm, from 1988 to 1990. Mr. Vincent
holds a degree in Business Administration and a Master's degree in
Finance.
James M. Kitterman, 50, was appointed Senior Vice President--
Operations in May 1993. He had previously served as Vice President--
Operations since joining the Company in 1983 with 16 years of prior
experience in oil and gas exploration, drilling and production. Mr.
Kitterman holds a degree in Petroleum Engineering and a Master's degree
in Business Administration.
Alton D. Heckaman, Jr., 38, was appointed Vice President and
Controller in May 1993. He had previously served as Assistant Vice
President--Finance and Controller since 1986. Mr. Heckaman joined the
Company in 1982. He is a Certified Public Accountant and holds a degree
in Accounting.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information regarding
compensation paid or accrued by the Company to or on behalf of the
Company's Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company (determined as of the end
of the last fiscal year) for the fiscal years ended December 31, 1992,
1993 and 1994.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation All Other Compensation ($)
Bonus(1) Awards
Name and Securities
Principal Underlying Life
Position Year Salary ($) Cash ($) Stock ($) Options/SARs(#) Insurance($)(3) 401(k)($)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
A. Earl Swift 1994 278,400 - - 12,100(5) 102,240 7,500
Chief Executive 1993 260,180 136,000 34,000 23,980(6) 47,941 7,925
Officer, President 1992 240,000 120,000 30,000 19,800 39,905 7,530
Virgil N. Swift 1994 190,600 - - 12,100(5) 29,019 7,500
Executive Vice 1993 178,180 31,350 7,839 21,340(6) 22,369 7,816
President-- 1992 168,000 20,164 5,041 16,500 17,072 6,280
Business Development
Terry E. Swift 1994 158,300 - - 52,756 6,138 7,500
Chief Operating 1993 145,180 27,100 6,775 16,390 5,573 7,580
Officer, Executive 1992 125,000 16,172 4,043 13,750 1,464 4,871
Vice President
John R. Alden 1994 142,500 - - 37,730 11,419 7,500
Chief Financial 1993 133,180 23,430 5,859 13,640 8,781 7,512
Officer, Senior 1992 123,000 15,092 3,773 11,000 4,374 4,727
Vice President--
Finance
James M. Kitterman 1994 138,400 - - 46,750 12,328 7,500
Senior Vice 1993 128,180 22,720 5,682 11,000 10,294 7,350
President-- 1992 118,000 13,848 3,462 8,800 5,000 4,571
Operations
</TABLE>
(1) Bonuses earned during 1994 had not been determined as of the date
hereof. Amounts reported for 1993 and 1992 include bonuses
earned during those years, but actually paid in the following
year.
(2) The numbers of securities underlying options granted in 1992,
1993 and 1994 reflect the 10% stock dividend that occurred in
September 1994.
(3) Represents insurance premiums paid by the Company during the
covered fiscal year with respect to life insurance for the
benefit of the named executive officer.
(4) Contributions by the Company (one-half in cash and one-half in
Company stock) for the account of the named executive officer to
the Swift Energy Company Employee Savings Plan.
(5) Includes for each of Messrs. A. E. Swift and V. N. Swift,
respectively, previously granted options for 12,100 shares that
were extended and repriced in 1994.
(6) Includes for each of Messrs. A. E. Swift and V. N. Swift,
respectively, previously granted options for 3,300 shares that
were extended and repriced in 1993.
Employment Contract
Effective June 1, 1994, Virgil Swift commenced a five year employment
agreement which provides for an immediate 40% reduction in salary,
coupled with an immediate 25% reduction in working hours, decreasing to
a 50% work schedule at the commencement of the third year of the
agreement and continuing for the remaining term thereof. The contract
also provides for a payment of $55,550 for four years in consideration
of Mr. Swift's agreement not to compete with the Company for a period of
seven years, although if Mr. Swift's employment is terminated by the
Company upon a change in control (as defined under "Change of Control
Arrangements" below), he is entitled to receive the non-competition
payments without compliance with those provisions and his remaining
salary in one lump sum, discounted to present value at 8% per annum.
Stock Option Grants
The following table contains information concerning the grant of stock
options during 1994 to the named executive officers under the Company's
1990 Stock Compensation Plan:
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
Number of % of Total
Securities Options/SARs
Underlying Granted Exercise or
Options/SARs Employees Base Price Expiration Grant Date
Name Granted (#)(1) in Fiscal Year ($/Sh)(2) Date Present Value ($)(3)
<S> <C> <C> <C> <C> <C>
A. Earl Swift 12,100 5.6% $9.659 5/10/2004 $ 68,486
Virgil N. Swift 12,100 5.6% $9.659 5/10/2004 $ 68,486
Terry E. Swift 52,756 24.5% $9.318 6/13/2004 $298,599
John R. Alden 37,730 17.5% $9.318 6/13/2004 $213,552
James M. Kitterman 46,750 21.7% $9.318 6/13/2004 $264,605
</TABLE>
(1) The options, all of which, except those granted to Messrs. A. Earl
Swift and Virgil N. Swift, were granted on June 13, 1994, become
exercisable for 20% of the shares covered thereby on each of the first
five anniversaries of the date of grant. A. Earl Swift and Virgil N.
Swift received their option grants on May 10, 1994, pursuant to an
extension and repricing of options previously granted. (See "Option
Repricings" below.) Reflects an increase in the number of shares as a
result of a 10% stock dividend payable to holders of record on September
19, 1994.
(2) The original exercise price, which equaled 100% of the highest
closing price of the Company's common stock on the New York Stock
Exchange on the date of grant was $10.625 for options granted to Messrs.
A. Earl Swift and Virgil N. Swift and $10.25 for options granted to
Messrs. Terry E. Swift, Alden and Kitterman. The exercise price has
been reduced to reflect the 10% stock dividend payable to holders of
record on September 19, 1994.
(3) Using Black-Scholes option pricing model.
Option Repricings
On May 10, 1993, and on August 8, 1994, the Compensation Committee of
the Company's board of directors extended and repriced certain
unexercised options held by A. Earl Swift and Virgil N. Swift. The
following table presents information on these repricings. There have
been no other repricings of options held by any executive officer of the
Company during the last ten completed fiscal years.
Ten-Year Option/SAR Repricings
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Option Term
Underlying Market Price of Exercise Price at Remaining at
Options/SARs Stock at Time of Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended(#)(1) Amendment($)(1) Amendment($)(1) Price ($)(1) Amendment
<S> <C> <C> <C> <C> <C> <C>
A. Earl Swift 08/08/94 12,100 $ 9.659 $10.750 $ 9.659 0
05/10/93 3,300 $10.000 $ 9.126 $10.000 0
Virgil N. Swift 08/08/94 12,100 $ 9.659 $10.750 $ 9.659 0
05/10/93 3,300 $10.000 $ 9.126 $10.000 0
</TABLE>
(1) The number of securities and market and exercise prices reported
above have been adjusted to reflect a 10% stock dividend payable
to the shareholders of record on September 19, 1994.
Option Values
The following table contains information concerning the number and
value of unexercised options held by the named executive officers at
December 31, 1994:
FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised In-the-
Unexercised Options/SARs Money Options/SARs at
at FY-End (#) FY-End ($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
A. Earl Swift 36,256 30,624 $29,125 $33,786
Virgil N. Swift 34,408 26,533 $22,551 $23,925
Terry E. Swift 34,575 75,425 $39,078 $47,156
John R. Alden 30,932 57,068 $25,755 $37,016
James M. Kitterman 21,230 61,270 $12,281 $35,168
</TABLE>
(1) Options are "in-the-money" if the market price of a share of
common stock exceeds the exercise price of the option. The value
of unexercised in-the-money options equals the market price of
18
<PAGE>
shares at December 31, 1994 ($9.75 per share) less the exercise
price.
Change of Control Arrangements
Under the 1990 Stock Compensation Plan and the 1990 Nonqualified Plan
(collectively, the "Plans"), the occurrence of a change of control of
the Company will (unless the board of directors provides otherwise prior
to the change of control) cause all outstanding stock options to become
fully exercisable, other than options that have been outstanding less
than one year. A "change of control" is defined in the Plans to mean
any of the following events: (i) any person or group becomes the
beneficial owner of shares having 40% or more of the votes that may be
cast for the election of directors; (ii) as a result of any cash tender
offer, exchange offer, merger or other business combination, sale of
assets or contested election, persons who were directors of the Company
immediately prior to such event cease to constitute a majority of the
board of directors; (iii) the shareholders of the Company approve an
agreement providing either for a transaction in which the Company will
cease to be an independent publicly owned corporation or for a sale or
other disposition of all or substantially all the assets of the Company;
or (iv) a tender offer or exchange offer is made for shares of the
Company's common stock (other than by the Company) and shares are
acquired thereunder.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The board of directors first established its Compensation Committee in
1982. The Compensation Committee has always been composed solely of
nonemployee directors, and has set executive compensation since that
time. Since 1987, when the Compensation Committee undertook an
evaluation of the Company's policies, compensation has been based upon
Company performance.
Philosophically, the Compensation Committee and the Company's Chief
Executive Officer believed it to be beneficial to the Company in its
early years to keep executive compensation in the low to middle ranges
in comparison to levels paid by comparable entities, particularly in
comparison to many companies in the oil and gas industry in which
compensation levels grew rapidly during the late 1970s and early 1980s.
Since 1987, the bonus compensation of the Company's Chief Executive
Officer has been based almost solely upon the Company's performance, as
described below.
In 1987 the Compensation Committee, with the help of an outside
consulting firm, determined that compensation paid to the Chief
Executive Officer was disproportionately low in relation to the
compensation of comparable executives in the industry. At that point
the Compensation Committee instituted an annual bonus for the Chief
Executive Officer equal to a sliding scale percentage of total
partnership and joint venture funds raised by the Company in that year,
providing that only the lowest bonus was to be paid, regardless of the
amounts of funds raised, if the Company's earnings did not increase by
at least 15% in that year. This formula was adopted at a time when most
19
<PAGE>
of the Company's earnings were derived from earned interests and fees
from partnership and joint venture activities.
In late 1989, as the proportion of the Company's revenues from oil and
gas sales began to grow significantly, and following the adoption of a
five-year strategic plan in 1988, the Company prepared an evaluation of
compensation among six entities selected by an investment banking firm
which were engaged in the same activities as the Company. Based upon
this analysis, the Compensation Committee adopted a new incentive
compensation system for the Company's executive officers, and revised
the bonus formula for the Chief Executive Officer, to one based upon
earnings per share and growth in oil and gas reserves, as described in
detail below. In 1995, the Compensation Committee further modified its
criteria to reflect the importance of cash flow to an oil and gas
company and the Company's increased emphasis on exploration and drilling
activities, in addition to acquisition of producing properties, given
the Compensation Committee's belief that successful drilling activities
are based upon a high level of drilling prospects. Accordingly, the
Compensation Committee has recently amended the bonus formula in the
1990 Stock Compensation Plan to add two factors: year-to-year increases
in both cash flow per share and probable reserves. It is the intent of
the Compensation Committee that the 1990 Plan as now amended be used for
determining incentive awards based upon 1994 Company performance.
Compensation Criteria and Performance Measurement
The Company's executive compensation consists of three components:
base salary, annual incentive bonuses, and long term stock-based
incentives.
Base Salary for a particular year is based upon (i) the executive's
scope of responsibility, (ii) an evaluation of each executive's
individual performance during the year, (iii) an attempt to keep
executive salaries within the range paid by comparably sized oil and gas
exploration and production companies, based in part upon an annual
survey provided by an outside consultant on a group of 37 independent
oil and gas companies with market capitalizations between $20 million
and $1.8 billion (the "Compensation Survey Group"), and (iv) an
evaluation of the Company's performance during the preceding year,
including the Company's earnings, reserve growth, cash flow and levels
of general and administrative expenses. Individual performance
evaluation is based upon each executive's review of his own performance
throughout the year and upon a performance review by the Company's Chief
Executive Officer, and in the case of the Chief Executive Officer, a
review of his performance by the Compensation Committee.
The Compensation Survey Group includes only one company in common with
the Dow Jones Oil, Secondary Index (the "Index") used in the "Five Year
Shareholder Return Comparison" set forth herein. The Compensation
Survey Group is used by the Company for purposes of executive
compensation comparison because it constitutes a broader group than the
group of 17 companies included in the Index, and because the
Compensation Survey Group is comprised of companies somewhat closer in
size and line of business to the Company than the companies included in
the Index. The Index was selected in accordance with Securities and
Exchange Commission rules solely for shareholder return comparison
purposes because it is a published industry index.
20
<PAGE>
Annual Incentive Bonuses for a particular year are awarded after the
end of that year, based on both individual and Company performance
during that year. Bonuses are awarded under the 1990 Stock Compensation
Plan (the "1990 Plan") in the form of Performance Bonus Awards, which
may be either in cash or in shares of the Company's common stock as
determined by the Compensation Committee. The amount of an executive
officer's Performance Bonus Award for a particular year is determined
under a formula that utilizes the following factors: (i) the increase
in earnings per share during that year (a measure of short-term
performance); (ii) the increase in the cash flow per share during that
year (a measure of short-term performance, (iii) the increase in the
volume of the Company's proved oil and gas reserves during that year (a
measure of long-term performance); (iv) the increase in the probable oil
and gas reserves during that year (a measure of long-term performance;
and (v) the overall performance of that executive officer in
contributing to the Company's achievement of its strategic objectives,
as evaluated by the Compensation Committee. The 1990 Plan, prior to the
1995 amendment, did not include the factors of increases in cash flow
per share and increases in probable reserves, while two of the factors,
earnings per share and reserve growth, are the same performance factors
upon which the Company's goals in its 1988 strategic plan were based.
Generally, the three broad categories of performance factors, short-term
factors, long-term factors and individual performance factors, are given
equal weight, except that the Committee may make adjustments in the
bonus formula or in the performance factors considered on a uniform
basis among all the executive officers (other than the Chief Executive
Officer, as to whom a different adjustment may be made). In determining
Performance Bonus Awards for 1993 (determined and paid in 1994), the
Committee considered the increase in earnings per share of 12%, the
increase in net income of 20% and the increase in reserves of 53% from
1992 to 1993. Additionally, the Compensation Committee took into
account individual performance ratings reflecting individual
contribution and contribution to group effectiveness.
Under the 1990 Plan, executive officers may receive Performance Bonus
Awards equal to up to 25% of their base salaries, and the award of the
Chief Executive Officer may be equal to up to 70% of his base salary.
Awards paid in the last three years averaged 12.8% of executive
officers' base salaries and 38.3% of the Chief Executive Officer's base
salary.
The Performance Bonus Award to the Chief Executive Officer
additionally differs from those awarded to the other executive officers
in that the size of the Chief Executive Officer's Performance Bonus
Award is more closely tied to Company performance, so that it has varied
more widely from year to year than the awards to other executive
officers.
Long-Term Stock-Based Incentives are provided through annual grants of
incentive stock options to executives and others under the 1990 Plan.
This component is intended to retain and motivate executives to improve
long-term shareholder value. Stock options are granted at the
prevailing market price and will only have value if the Company's stock
price increases. Grants vest in equal amounts over five years;
executives must be employed by the Company at the time of vesting in
order to exercise the options.
21
<PAGE>
The Compensation Committee determines a total number of options to be
granted in any year based on the total number of outstanding unexercised
executive options, so as to avoid excessive dilution of the
shareholders' value in the Company through executive option exercises.
Out of the number so determined, options are granted to executive
officers in varying amounts, roughly related to their levels of
executive responsibility. Outstanding historical performance by an
executive officer may be recognized through a larger than normal option
grant.
The Company believes that its compensation policy described above
provides an excellent link between the value created for shareholders
and the compensation paid to executive officers.
Compensation of Chief Executive Officer in 1994
Base Salary. The Chief Executive Officer's base salary in 1994 was
$278,400, which represented an increase of 7% from his 1993 base salary.
The Compensation Committee's determination to raise the Chief Executive
Officer's salary in 1994 was based on the factors described above under
"--Compensation Criteria and Performance Measurement--Base Salary."
With respect to the Company's performance, the Compensation Committee
gave particular weight to the increase from 1992 to 1993 in the
Company's net income (from approximately $4.1 million to $4.9 million),
earnings per share (from $0.73 to $0.82), and proved oil and gas
reserves (from 9.8 million to 15.0 million barrels of oil equivalent).
Bonus. As of the date of this Proxy Statement, the Compensation
Committee has not determined the Chief Executive Officer's Performance
Bonus Award for 1994 under the 1990 Plan. The Compensation Committee
has usually made its bonus determinations in May of each year, following
availability of final financial and reserve information for the previous
fiscal year. The Performance Bonus Award for the Chief Executive
Officer's 1994 performance is expected to be determined and paid in May
1995, and will be based on the factors described above under "--
Compensation Criteria and Performance Measurement--Annual Incentive
Bonuses." As noted there, the Committee may give a different weighting
to the five bonus formula performance factors in determining the Chief
Executive Officer's bonus than it uses in determining bonuses for other
executive officers. In determining the Chief Executive Officer's bonus
the Committee has typically given more weight to factors based upon the
Company's performance than to its evaluation of his general
contribution, since the Committee does not observe and supervise such
performance on a day-to-day basis.
Stock Options. The Chief Executive Officer was not granted any
options for shares of common stock in 1994 other than options repriced
during 1994. See "Option Repricings in 1994" below.
Section 162(m) of the Internal Revenue Code. The Compensation
Committee does not propose to adopt any particular policy with respect
to Section 162(m) of the Internal Revenue Code, which was adopted by
Congress in 1993 and limits the deductibility of compensation paid to
any individual in excess of $1 million per year. The Company has not
paid and does not anticipate paying compensation at these levels, and
even including the unrealized value of unexercised stock options, does
not believe that these provisions will be relevant to the Company's
executive compensation levels for the foreseeable future.
22
<PAGE>
Option Repricings in 1994
Effective August 8, 1994, the Compensation Committee amended options
held by A. Earl Swift, the Chief Executive Officer, and Virgil N. Swift,
Executive Vice President--Business Development, to extend the terms of
such options from five years to ten years and to decrease the exercise
price from $10.750 per share to $9.659 per share. The options had
originally been granted on August 8, 1989, and were scheduled to expire
on August 8, 1994. Such options had originally carried a five-year
term, rather than the ten-year option term typically granted to the
Company's executive officers, to comply with Internal Revenue Code rules
for incentive stock options applicable to persons deemed to be ten-
percent shareholders of the Company. As of the scheduled expiration
date, these officers were no longer deemed to be ten-percent
shareholders under these rules and the Committee determined to extend
the options so that these officers would not be treated less favorably
than other executive officers of the Company. The exercise price was
amended to equal the market price of the Company's common stock as of
the date of repricing.
COMPENSATION COMMITTEE
Raymond O. Loen, Chairman
Henry C. Montgomery
Harold J. Withrow
23
<PAGE>
Five Year Shareholder Return Comparison
The graph below compares the cumulative total return on the Company's
common stock to that of (i) the Standard & Poor's 500 Stock Index and
(ii) the Dow Jones Oil, Secondary Index.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Swift Energy Co 100 90 52 79 83 93
S & P 500 100 97 126 136 150 152
D J OIL - SECONDARY 100 83 82 82 91 88
</TABLE>
"Cumulative total return" equals (i) the change in share price during
the measurement period plus cumulative dividends for the measurement
period (assuming dividend reinvestment), divided by (ii) the share price
at the beginning of the measurement period.
24
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of its business, the Company acquires interests
in exploratory and developmental oil and gas prospects and sells
interests in such prospects to unaffiliated third parties. For the past
several years, the Company has made available for sale to its executive
officers and certain other employees a portion of the interests in
certain prospects that would otherwise have been sold to third parties.
Interests in a prospect are sold to the Company's employees on terms
identical to those at which interests are sold to third party investors
in that prospect. As a result of enhanced drilling activity, the
amounts invested by officers and employees in such prospects in 1994
increased significantly over previous years. During 1994, five of the
Company's executive officers (A. Earl Swift, Virgil N. Swift, Terry E.
Swift, John R. Alden and Alton D. Heckaman, Jr.) incurred a total of
approximately $258,003 in leasehold and drilling costs associated with
such investments, $170,516 of which was incurred by Virgil N. Swift.
Unaffiliated third parties have invested in all of the prospects in
which the officers invested, on identical terms.
AUDITORS
Arthur Andersen LLP, certified public accountants, has served as the
independent auditors of the Company since its inception. While
management anticipates that this relationship will continue to be
maintained during 1995 and subsequent years, it is not proposed that any
formal action be taken at the meeting with respect to the continued
employment of Arthur Andersen LLP, inasmuch as no such action is legally
required. A representative from Arthur Andersen LLP will be present at
this year's meeting of shareholders. Such representative will have the
opportunity to make a statement if he desires to do so and is expected
to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for action to be
included in the proxy statement and form of proxy relating to the
Company's 1996 annual meeting of shareholders, scheduled to be held
May 14, 1996, shall submit such proposal to the Company on or before
December 12, 1995.
By Order of the Board of Directors
JOHN R. ALDEN
Secretary
Houston, Texas
April 11, 1995
<PAGE>
