<PAGE>
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 March 31, 1997
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 Drive, Suite 400
Houston, Texas 77060
(281) 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 and 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 15,237,925 Shares
($.01 Par Value) (Outstanding at April 30, 1997)
(Class of Stock)
1
<PAGE>
SWIFT ENERGY COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
- March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Income
- For the Three-month periods ended March 31, 1997 and 1996 5
Condensed Consolidated Statements of Stockholders' Equity
- March 31, 1997 and December 31, 1996 6
Condensed Consolidated Statements of Cash Flows
- For the Three-month periods ended March 31, 1997 and 1996 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
PART II. OTHER INFORMATION
Items 1-6. None 22
SIGNATURES 23
</TABLE>
2
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
----------------- -----------------
(Unaudited) (Note 1)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 68,169,461 $ 77,794,974
Accounts Receivable -
Oil and gas sales 9,458,142 13,637,390
Associated limited partnerships
and joint ventures 5,195,040 6,396,149
Joint interest owners 3,318,211 3,079,619
Other current assets 385,280 711,346
----------------- -----------------
Total Current Assets 86,526,134 101,619,478
----------------- -----------------
Property and Equipment:
Oil and gas, using full-cost accounting
Proved properties being amortized 240,151,532 216,310,033
Unproved properties not being amortized 31,473,305 27,620,462
----------------- -----------------
271,624,837 243,930,495
Furniture, fixtures, and other equipment 5,964,394 5,729,228
----------------- -----------------
277,589,231 249,659,723
Less-Accumulated depreciation, depletion,
and amortization (52,233,933) (46,685,736)
----------------- -----------------
225,355,298 202,973,987
----------------- -----------------
Other Assets:
Receivables from associated limited
partnerships, net of current portion 1,044,344 759,711
Limited partnership formation and
marketing costs 973,350 510,607
Deferred charges 4,434,442 4,511,481
----------------- -----------------
6,452,136 5,781,799
----------------- -----------------
$ 318,333,568 $ 310,375,264
================= =================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------ ------------------
(Unaudited) (Note 1)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 20,132,532 $ 20,416,589
Payable to associated limited partnerships 4,008,564 1,444,648
Undistributed oil and gas revenues 9,876,200 11,054,379
----------------- -----------------
Total Current Liabilities 34,017,296 32,915,616
----------------- -----------------
Long-Term Debt 115,000,000 115,000,000
Deferred Revenues 4,002,512 4,404,081
Deferred Income Taxes 18,403,236 15,293,957
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, 15,237,249 and 15,176,417
shares issued and outstanding, respectively 152,372 151,764
Additional paid-in capital 102,861,528 102,018,861
Treasury stock held, at cost, 157,900 shares (3,759,895) ----
Unearned ESOP compensation (225,083) (521,354)
Retained earnings 47,881,602 41,112,339
----------------- -----------------
146,910,524 142,761,610
----------------- -----------------
$ 318,333,568 $ 310,375,264
================= =================
</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 March 31,
1997 1996
---- ----
<S> <C> <C>
REVENUES:
Oil and gas sales $18,369,651 $ 9,691,962
Fees from limited partnerships and
joint ventures 98,730 69,923
Supervision fees 1,247,967 1,031,205
Interest income 998,825 8,436
Other, net 530,296 387,321
----------- -----------
21,245,469 11,188,847
----------- -----------
COST AND EXPENSES:
General and administrative,
net of reimbursement 1,575,154 1,437,508
Depreciation, depletion, and
amortization 5,396,947 3,269,535
Oil and gas production 2,762,692 1,848,163
Interest expense, net 1,349,631 72,118
----------- -----------
11,084,424 6,627,324
----------- -----------
Income Before Income Taxes 10,161,045 4,561,523
Provision for Income Taxes 3,391,782 1,479,142
----------- -----------
Net Income $ 6,769,263 $ 3,082,381
=========== ===========
Per Share Amounts -
Primary $0.45 $0.25
===== =====
Fully diluted $0.41 $0.22
===== =====
Weighted Average Shares Outstanding 15,184,214 12,540,381
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Unearned
Common Paid-In Treasury ESOP Retained
Stock(1) Capital Stock Compensation Earnings Total
------- ------------ ----------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ 125,097 $ 71,133,979 $ ---- $ ---- $22,086,889 $ 93,345,965
Stock issued for benefit plans
(30,015 shares) 300 347,345 ---- ---- ---- 347,645
Stock options exercised
(257,207 shares) 2,572 2,630,959 ---- ---- ---- 2,633,531
Employee stock purchase plan
(36,387 shares) 364 272,178 ---- ---- ---- 272,542
Loan to ESOP for purchase
of shares ---- ---- ---- (568,750) ---- (568,750)
Allocation of ESOP shares ---- 5,382 ---- 47,396 ---- 52,778
Debenture conversion
(2,343,108 shares) 23,431 27,629,018 ---- ---- ---- 27,652,449
Net income ---- ---- ---- ---- 19,025,450 19,025,450
--------- ------------ ----------- --------- ----------- ------------
Balance, December 31, 1996 $ 151,764 $102,018,861 $ ---- $(521,354) $41,112,339 $142,761,610
========= ============ =========== ========= =========== ============
Stock issued for benefit plans
(12,227 shares)(2) 122 371,359 ---- ---- ---- 371,481
Stock options exercised
(48,605 shares)(2) 486 387,313 ---- ---- ---- 387,799
Allocation of ESOP shares(2) ---- 83,995 ---- 296,271 ---- 380,266
Purchase of 157,900 shares
of treasury stock (2) ---- ---- (3,759,895) ---- ---- (3,759,895)
Net income(2) ---- ---- ---- ---- 6,769,263 6,769,263
-------- ------------ ----------- -------- ----------- ------------
Balance, March 31,1997 (2) $ 152,372 $102,861,528 $(3,759,895) $(225,083) $47,881,602 $146,910,524
========= ============ =========== ========= =========== ============
</TABLE>
(1) $.01 Par Value
(2) Unaudited
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
SWIFT ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 6,769,263 $ 3,082,381
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation, depletion, and amortization 5,396,947 3,269,535
Deferred income taxes 3,109,279 1,240,735
Deferred revenue amortization related to production payment (401,569) (433,952)
Other 457,304 29,757
Change in assets and liabilities -
(Increase) decrease in accounts receivable 2,617,292 (745,474)
Increase (decrease) in accounts payable and accrued
liabilities, excluding income taxes payable 1,315,055 (462,779)
Increase in income taxes payable 275,476 218,953
------------- -------------
Net Cash Provided by Operating Activities 19,539,047 6,199,156
------------- -------------
Cash Flows From Investing Activities:
Additions to property and equipment (28,408,757) (11,480,579)
Proceeds from the sale of property and equipment 529,839 ----
Net cash received (distributed) as operator of oil
and gas properties 1,288,099 (13,142,919)
Net cash received (distributed) as operator of
partnerships and joint ventures 738,366 1,914,723
Limited partnership formation and marketing costs (462,743) (493,306)
Prepaid drilling costs ---- (143,142)
Other 151,251 (81,648)
------------- --------------
Net Cash Used in Investing Activities (26,163,945) (23,426,871)
-------------- --------------
Cash Flows From Financing Activities:
Net proceeds from bank borrowings ---- 12,000,000
Net proceeds from issuances of common stock 759,280 596,540
Purchase of treasury stock (3,759,895) ----
-------------- -------------
Net Cash Provided by (Used in) Financing Activities (3,000,615) 12,596,540
-------------- -------------
Net Decrease in Cash and Cash Equivalents (9,625,513) (4,631,175)
Cash and Cash Equivalents at Beginning of Period 77,794,974 7,574,512
------------- -------------
Cash and Cash Equivalents at End of Period $ 68,169,461 $ 2,943,337
============= =============
Supplemental disclosures of cash flows information:
Cash paid during period for interest, net of amounts capitalized $ ---- $ 509,549
Cash paid during period for income taxes $ ---- $ 19,454
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
(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, 1996 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.
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 transactions that involve a significant
amount of reserves. The proceeds from the sale of oil and gas properties
are generally treated as a reduction of oil and gas property costs. Fees
from associated oil and gas exploration and development limited
partnerships are 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, and 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 and 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, and dismantlement and abandonment costs
8
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
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 6.5%
Convertible Subordinated Debentures due 2003 (the "Debentures") in June
1993 were capitalized and through June 1996 were being amortized over the
life of the Debentures. Due to the conversion of all outstanding
Debentures into common stock in August 1996, the related unamortized
costs ($1,097,551) were transferred to the Company's appropriate capital
accounts in the third quarter of 1996. The issuance costs associated with
the Company's 6.25% Convertible Subordinated Notes (the "Notes") sold in
a public offering in November 1996 have been capitalized and are being
amortized over the life of the Notes, which mature on November 15, 2006.
The balance of these issuance costs at March 31, 1997 ($4,434,442) is net
of accumulated amortization of $115,558.
Hedging Activities
The Company's revenues are primarily the result of sales of its oil
and natural gas production. Market prices of oil and natural gas may
fluctuate and adversely affect operating results. To mitigate some of
this risk, the Company does engage periodically in certain limited
hedging activities, but only to the extent of buying protection price
floors for portions of its and the limited partnerships' oil and gas
production. Costs and/or benefits derived from these price floors are
recorded as a reduction or increase, as applicable, in oil and gas sales
revenue and were not significant for any period presented. The costs to
purchase put options are amortized over the option period.
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. Volumes remaining to be delivered through
October 2000, under the volumetric production payment (approximately 2.7
Bcf at March 31, 1997) are not included in the Company's proved reserves.
Net proceeds from the sale of the production payment were
9
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
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. Hydrocarbons produced in excess of the
amount required to be delivered are sold by the Company for its own
account.
Limited Partnerships and Joint Ventures
Between 1991 and 1995 (and for prior periods), the Company formed
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
serves as managing general partner or manager of these entities. 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 Company's 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, virtually all of which are owed to the
Company and are not material for any of the periods presented in relation
to the partnerships' respective assets.
Under the Swift Depositary Interests limited partnership offering
("SDI Offering"), which commenced in March 1991 and concluded in December
1995, the Company received a reimbursement of certain costs and a fee,
both payable out of revenues. The Company bore all front-end costs of the
offering and partnership formations for which it received an interest in
the partnerships. Upon the Company's decision to conclude the SDI
offering at the end of 1995, the remaining limited partnership formation
and marketing costs related to the SDI offering (approximately
$1,750,000) were accordingly transferred to the Company's oil and gas
properties account.
Commencing September 15, 1993, the Company began offering, on a
private placement basis, general and limited partnership interests in
limited partnerships to be formed to drill for oil and gas. As managing
general partner, the Company pays for all front-end costs incurred in
connection with these offerings, for which the Company receives an
interest in the partnerships. Through March 31, 1997, approximately
$41,900,000 had been raised in eight partnerships, one formed in each of
1993 and 1994, and three in each of 1995 and 1996. In July, September,
and November 1996, the Company closed the sixth, seventh, and eighth
partnerships with total subscriptions of approximately $4,900,000,
$10,000,000, and $7,100,000, respectively. Costs of syndication and
qualification of these limited partnerships incurred by the Company have
been deferred. Under the current private limited partnership offerings,
selling and formation costs borne by the Company serve as the Company's
general partner contribution to such partnerships.
During 1996, the limited partners in 18 partnerships, which had been in
operation over nine years and have produced a substantial majority of
their reserves, voted to sell their remaining properties and liquidate
the limited partnerships. In 1996, 10 of the earliest public income
partnerships were liquidated, and in early 1997 eight private drilling
partnerships will be liquidated. The Company intends to make similar
proposals to other partnerships for an orderly sale of their properties
and liquidation of the partnerships over the next several years. The
Company may offer to acquire certain portions of the remaining property
interests owned by these limited partnerships.
10
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
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 Per Share
Primary income 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 a dilutive effect on primary
income per share. The Company's Debentures were not and the Notes are not
common stock equivalents for the purpose of computing primary income per
share.
The calculation of fully diluted income per share assume conversion
of the Company's Notes and Debentures as of the beginning of the period
and the elimination of the related after-tax interest expense and assume,
as of the beginning of the period, exercise (using the treasury stock
method) of stock options and warrants. The weighted average number of
shares used in the computation of fully diluted per share amounts was
18,991,102 and 15,133,648 for the respective three-month period ended
March 31, 1997 and 1996. Due to the August 1996 conversion of these
Debentures into 2.34 million shares of common stock, as described below,
the effect of such conversion in the March 31, 1997 period is included in
primary income per share.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share" which establishes new standards for computing and presenting
earnings per share. The provisions of the statement are effective for
fiscal years ending after December 15, 1997. If the provisions of SFAS
No. 128 had been adopted in the first quarter of 1997 and 1996, basic and
diluted earnings per share would have been the same as currently reported
for primary and fully diluted earnings per share.
(3) BANK BORROWINGS
The Company has available through a two bank-group, a revolving line
of credit. Effective April 30, 1996, this credit agreement was restated.
The facility was increased to $100,000,000 and is now unsecured. The
available borrowing base at March 31, 1997, was $5,000,000, and will be
redetermined periodically. Prior to December 1, 1996, the borrowing base
was $30,000,000. At the Company's request, it was reduced to the
$5,000,000 amount effective December 1, 1996. This was requested in order
to reduce the amount of commitment fees paid on this facility, the
calculation of which is described below. Depending on the level of
outstanding debt, the interest rate will be either the bank's base rate
(8.25% at March 31, 1997) or the bank's base rate plus 0.25%. This
11
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
facility also allows, at the Company's option, draws which bear interest
for specific periods at the London Interbank Offered Rate ("LIBOR"). The
LIBOR option will now vary from plus 1% to plus 1.5%. There was no
outstanding balance under this line of credit at either March 31, 1997 or
December 31, 1996. The restated revolving line of credit extends through
September 30, 1999.
The terms of the revolving line of credit include, among other
restrictions, a limitation on the level of cash dividends (not to exceed
$2,000,000 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 March 31, 1997 and
December 31, 1996, the Company was in compliance with the provisions of
these agreements.
The Company's other credit facility, which is the Company's only
secured facility, is an amended and restated revolving line of credit
with the lead bank of the two bank-group, secured by certain Company
receivables. This facility, effective April 30, 1996, was amended to
$7,000,000 with interest at the bank's base rate less 0.25% (8% at March
31, 1997). The available borrowing base is $2,000,000 at March 31, 1997,
and will be redetermined periodically. This borrowing base decrease from
$7,000,000 was also effective December 1, 1996, at the Company's request.
There was no outstanding amount on this facility at either March 31, 1997
or December 31, 1996. This restated credit facility extends through
September 30, 1999.
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 letters of credit outstanding
during the period. The aggregate amounts of commitment fees paid by the
Company were $6,600 for the first three months of 1997 and $120,000 for
the twelve-month period in 1996.
(4) LONG-TERM DEBT
The Company's long-term debt at March 31, 1997 and December 31, 1996,
consists of $115,000,000 of 6.25% Convertible Subordinated Notes due 2006
("Notes"). The Notes were issued on November 25, 1996, and will mature on
November 15, 2006. The Notes are convertible into common stock of the
Company at the option of the holders at any time prior to maturity at a
conversion price of $34.69 per share, subject to adjustment upon the
occurrence of certain events. Interest on the Notes is payable
semiannually on May 15 and November 15, commencing with the first payment
on May 15, 1997. On or after November 15, 1999, the Notes are redeemable
for cash at the option of the Company, with certain restrictions, at
104.375% of principal, declining to 100.625% in 2005. 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 Notes will have the
right to require the Company to repurchase the Notes 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.
12
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
The Company's long-term debt previously consisted of $28,750,000 of
6.5% Convertible Subordinated Debentures due 2003 ("Debentures"). The
Debentures were issued on June 30, 1993 under terms making them
convertible into common stock of the Company at an adjusted conversion
price of $12.27 per share. The Debentures became redeemable for cash at
the option of the Company after June 30, 1996. On July 1, 1996, the
Company called all of the Debentures for redemption on August 5, 1996 at
104.55% of their face amount. Prior to the redemption date, the holders
of all of the outstanding Debentures elected to convert their Debentures
into shares of common stock, resulting in the issuance of 2.34 million
shares of common stock in August 1996. Upon conversion of the Debentures
into common stock, the approximate $27,650,000 net carrying amount of the
debt (the face amount less unamortized deferred charges) was transferred
to the Company's appropriate capital accounts during the third quarter of
1996.
Interest expense on the Notes, including amortization of debt
issuance costs, totaled $1,873,914 for the three-month period ending
March 31, 1997, while interest expense on both the Notes and Debentures,
including amortization of debt issuance costs, totaled $1,731,194 for the
twelve-month period ending December 31, 1996.
(5) STOCKHOLDERS' EQUITY
In August 1996, the holders of the Company's Debentures converted
such Debentures into 2.34 million shares of the Company's common stock,
which resulted in a third quarter 1996 increase in the Company's capital
accounts of approximately $27,650,000.
In 1996, the Company established an Employee Stock Ownership Plan
("ESOP"), effective January 1, 1996. All employees over the age of 21
with one year of service are participants. The Plan has a five year cliff
vesting, and service is recognized after the Plan effective date. The
ESOP is designed to enable employees of the Company to accumulate stock
ownership. While there will be no employee contributions, participants
will receive an allocation of stock which has been contributed by the
Company. Compensation costs are reported when such shares are released to
employees. The Plan may also acquire Swift Energy Company common stock
purchased at fair market value. The ESOP can borrow money from the
Company to buy Company stock as was done in September 1996 to purchase
25,000 shares from the Company's chairman. Benefits will be paid in a
lump sum or installments, and the participants generally have the choice
of receiving cash or stock. At March 31, 1997 and December 31, 1996, the
unearned portion of the ESOP ($225,083) and ($521,354), respectively, was
recorded as a contra-equity account entitled "Unearned ESOP
Compensation."
In March 1997, the Company's board of directors approved a common
stock repurchase program for up to $20.0 million of the Company's common
stock throughout 1997. Purchases of shares are made in the open market.
Under the program, through March 31, 1997, approximately 157,900 shares
have been acquired at a total cost of $3.76 million and are included in
"Treasury stock held, at cost" on the balance sheet at March 31, 1997.
13
<PAGE>
SWIFT ENERGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996
(6) 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
providing the Company with a minimum 5% net profits interest from the
sale of hydrocarbon products from the fields for providing managerial,
technical, and financial support to Senega. Additionally, the Company
purchased a 1% net profits interest from Senega for $300,000. In May
1995, the Company executed a Management Agreement with Senega, under
which, in return for undertaking to obtain financing for development of
these fields, Swift is entitled to receive a 49% interest in production
income derived by Senega from this project after repayment of costs.
On July 12, 1996, the Company entered into a partnership agreement
which provides for the Company to contribute its rights under the
Participation and Management Agreement to the partnership and for the
partners to share equally revenues and costs of developing the Samburg
Field and funding and management of the license areas, all in conjunction
with Senega. The partnership is to be funded by the partners upon
fulfillment of certain conditions and completion of certain further
arrangements with Senega. It is currently anticipated that these
activities would be funded principally through project financing. At
March 31, 1997, the Company's investment in Russia was approximately
$9,744,000, and is included in the unproved properties portion of oil and
gas properties.
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. Although,
the Company did not win the bids, it has continued to pursue cooperative
ventures involving other fields and opportunities in Venezuela.
Currently, the Company is evaluating a number of Blocks being offered by
Petroleos de Venezuela, S.A. under the Third Operating Agreement Round.
At March 31, 1997, the Company's investment in Venezuela was
approximately $2,113,000 and is included in the unproved properties
portion of oil and gas properties net of impairments of $45,668.
New Zealand
Since October 1995, the Company has been issued two Petroleum
Exploration Permits by the New Zealand Minister of Energy. The first
permit covers approximately 65,000 acres in the Onshore Taranaki Basin of
New Zealand's North Island, and the second covers approximately 69,300
adjacent acres. Under the terms of the permits, the Company is obligated
to analyze and interpret certain seismic data, acquire certain new
seismic data and drill one exploratory well, to be followed by a
development well or additional seismic work, all of which is to be
performed on a staged basis in order to maintain the permits, over
periods extending through July 2000 for the first permit and August 1999
for the second permit. At March 31, 1997, the Company's investment in New
Zealand was approximately $1,376,000 and is included in the unproved
properties portion of oil and gas properties.
14
<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 Condensed Consolidated Financial Statements and Notes thereto.
GENERAL
The Company was formed in 1979, and from 1985 to 1991 grew primarily
through the acquisition of producing properties funded through limited
partnership financing. Commencing in 1991, the Company began to
reemphasize the addition of reserves through increased exploration and
development drilling activity. This emphasis on exploration and
development drilling has led to additions of increasing quantities of
reserves in each of 1994, 1995, 1996, and the first three months of 1997.
The statements contained in this Quarterly Report on Form 10-Q
("Quarterly Report") that are not historical facts are forward-looking
statements as that term is defined in Section 21E of the Securities and
Exchange Act of 1934, as amended, and therefore involve a number of risks
and uncertainties. The actual results of the future events described in
such forward-looking statements in this Quarterly Report, including those
regarding the Company's financial results, levels of oil and gas
production or revenues, capital expenditures, and capital resource
activities, could differ materially from those estimated. Among the
factors that could cause actual results to differ materially are: general
economic conditions, competition and government regulations, and
fluctuations in oil and natural gas prices, as well as the risks and
uncertainties set forth from time to time in the Company's other public
reports, filings, and public statements. Also, because of the volatility
in oil and gas prices and other factors, interim results are not
necessarily indicative of those for a full year.
LIQUIDITY AND CAPITAL RESOURCES
In 1991, the Company's strategy shifted toward an increased reliance
on exploration and development activities, and the Company has
significantly expanded reserves added through these efforts. Previously,
the Company relied on limited partnership capital as its principal
financing vehicle to fund its acquisitions of producing properties. As a
result of this shift in strategy, the Company has reduced its reliance on
cash flows generated from and capital raised through limited
partnerships. Cash and working capital are provided through internally
generated cash flows and debt and equity financing.
During the first ten months of 1996, the Company relied upon
internally generated cash flows and bank borrowings to fund its capital
expenditures. In November 1996, the Company realized $110.45 million in
net proceeds from an offering of 6.25% Convertible Subordinated Notes due
2006 that provided sufficient capital to repay the Company's bank
financing and finance its capital expenditures through the first quarter
of 1997 and is expected to provide, along with internally generated cash
flows, for capital expenditures and working capital needs for the
remainder of 1997. Described below are the major elements of the
Company's liquidity and capital resources.
15
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED
Net Cash Provided by Operating Activities
For the three month period ended March 31, 1997, net cash provided by
operating activities increased significantly (215%) to $19.5 million, as
compared to $6.2 million during the first three months of 1996. The 1997
increase of $13.3 million was primarily due to an increase in cash flows
from oil and gas sales, which increased $8.7 million (94%), exclusive of
the noncash amortization of deferred revenues associated with the
Company's volumetric production payment. This increase in oil and gas
sales was primarily the result of increased production volumes and higher
product prices, as described below.
Sale of Convertible Subordinated Notes
In November 1996, the Company issued $115.0 million of 6.25%
Convertible Subordinated Notes due November 15, 2006, in a public
offering. Proceeds of the offering were used for repayment in full of all
the Company's bank borrowings ($33.1 million on November 25, 1996) and
for capital expenditures through the first quarter of 1997, with the
remainder of the proceeds to be used, along with internally generated
cash flows, to fund capital expenditures and working capital needs. The
principal terms of these Notes are more fully described in Note 4 to the
Company's Condensed Consolidated Financial Statements.
Other Financing Activities
Convertible Subordinated Debentures. On June 30, 1993, the Company
issued $28.75 million of 6.5% Convertible Subordinated Debentures due
2003 in a public offering. Proceeds of the offering were used primarily
to acquire producing oil and gas properties and to finance the Company's
expanding exploration and development program. As described in Note 4 to
the Company's Condensed Consolidated Financial Statements included
herein, in August 1996 the Debentures were converted by their holders
into 2.34 million shares of the Company's common stock following the
Company's July 1996 announcement of their redemption in August 1996,
unless earlier converted. As a result of this conversion, the Company's
stockholders' equity increased approximately $27.65 million.
16
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED
Credit Facilities
In recent years, the Company's credit facilities have been used to
fund a portion of the Company's exploration and development activities.
Formerly, the Company established credit facilities which were 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. These credit facilities consist of a $100.0 million unsecured
revolving line of credit with a $5.0 million borrowing base, and a $7.0
million secured revolving line of credit with a $2.0 million borrowing
base. The principal terms and restrictions of these credit facilities are
described in Note 3 to the Company's Condensed Consolidated Financial
Statements included herein.
At March 31, 1997 and at December 31, 1996, the Company had no
outstanding balances under these borrowing arrangements, since those
borrowings were repaid with proceeds from the Company's 6.25% Convertible
Subordinated Notes offering in 1996.
Partnership Programs. Since late 1993, the Company has offered
private partnerships formed to drill for oil and gas. During 1996, the
Company formed three drilling partnerships with total subscriptions of
approximately $22.0 million and in May 1997 formed a $4.4 million
partnership. The Company anticipates that it will continue to offer the
drilling partnerships for the foreseeable future and expects to form its
second 1997 partnership on or about June 30, 1997.
At March 31, 1997, limited partnership formation and marketing costs
(which under the current drilling partnership offerings are borne by the
Company as part of the Company's general partner contribution) amounted
to $973,000, an increase of $463,000, when compared with the December 31,
1996 balance. In May 1997, this balance will be reduced as associated
contribution costs of the first 1997 partnership will be transferred to
the oil and gas properties account as the Company's general partner
contribution in that partnership.
During 1996, the limited partners in 18 partnerships, which had been in
operation over nine years and have produced a substantial majority of
their reserves, voted to sell their remaining properties and liquidate
the limited partnerships. In 1996, 10 of the earliest public income
partnerships were liquidated, and in early 1997 eight private drilling
partnerships will be liquidated. The Company intends to make similar
proposals to other partnerships for an orderly sale of their properties
and liquidation of the partnerships over the next several years. The
Company may offer to acquire certain portions of the remaining property
interests owned by these limited partnerships.
Working Capital
The Company's working capital has decreased over the last three
months, from $68.7 million at December 31, 1996, to $52.5 million at
March 31, 1997. This decrease is primarily the result of the Company's
capital expenditures as described below.
Since year end 1996, the Company's receivable account from limited
partnerships decreased due to repayments made with funds generated from
(a) property sales proceeds realized by these partnerships, and (b) the
continuation of strong oil and gas prices received by these partnerships.
Both of these increased the cash flows of these partnerships, thus
allowing them to reduce their balances owed to the Company.
17
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED
Due to the nature of the Company's business highlighted above, the
individual components of its working capital fluctuate considerably from
period to period. The Company incurs significant working capital
requirements in connection with its role as operator of approximately 870
wells, its accelerated drilling programs, 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.
Stock Repurchase Program
In March 1997, the Company's board of directors approved a common
stock repurchase program for up to $20.0 million of the Company's common
stock throughout 1997. Purchases of shares are made in the open market.
As of March 31, 1997, the Company used $3.76 million of working capital
to acquire 157,900 shares at an average cost of $23.81 per share. Through
April, 383,900 shares have been acquired at a total cost of $8.44 million
($21.99 per share).
Capital Expenditures
Capital expenditures for property, plant, and equipment during the
first three months of 1997 were $28.4 million. These capital expenditures
included: (a) $23.6 million of drilling costs, both exploratory and
developmental (primarily in the AWP Olmos Field and Austin Chalk trend),
(b) $3.3 million of prospect costs (principally prospect leasehold,
seismic and geological costs of unproved prospects for the Company's
account), (c) $1.3 million invested in foreign business opportunities in
New Zealand (approximately $628,000), in Venezuela (approximately
$508,000), and in Russia (approximately $211,000), as described in Note 6
to the Company's Condensed Consolidated Financial Statements included
herein, with the remainder spent primarily for computer equipment and
furniture and fixtures. In the remaining nine months of 1997, the Company
expects capital expenditures to be approximately $85.0 million, including
investments in all areas in which investments were made during the first
three months of the year as described above, with a particular focus on
exploratory and development drilling. The Company currently plans to
participate in the drilling of 178 gross wells this year, compared to 153
wells in 1996. Through March 31, 1997, the Company had participated in
drilling 60 wells (5 exploratory and 55 development wells with 3
exploratory successes and 54 development successes). The steady growth in
the Company's unproved property account which is not being amortized is
indicative of the shift to a focus on drilling activity, as the Company
acquires prospect acreage. This unproved property account also reflects
$1.3 million of capital expenditures in the first three months of 1997
made in relation to the Company's foreign business opportunities, as
described above.
The Company believes that 1997's 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 remainder of the net proceeds from the November 1996 Notes offering,
will be sufficient to finance the costs associated with its currently
budgeted 1997 capital expenditures and other uses of working capital.
Further liquidity needs may also be met by its existing credit
facilities.
18
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1997 and 1996
Net income of $6.8 million and earnings per share of $0.45 for the
first three months of 1997 were 120% and 80% higher, respectively, than
net income of $3.1 million, and earnings per share of $0.25 in the same
period for 1996. This increase in net income primarily reflected the
effect of a 90% increase in oil and gas sales revenues as a result of a
55% increase in natural gas production volumes, a 4% increase in crude
oil production volumes, plus product price improvements. The lower
percentage increase in earnings per share reflects a 21% increase in
weighted average shares outstanding for the period, as a result of the
conversion of the 1993 Debentures into 2.34 million shares of common
stock in the third quarter of 1996.
Revenues
The Company's revenues increased 90% during the first three months of
1997 from the comparative period in 1996, due primarily to the increase
in oil and gas sales. Oil and gas sales increased 90% to $18.4 million in
the first quarter of 1997, compared to $9.7 million for the comparative
period in 1996. The 55% increase in natural gas production and the 4%
increase in oil production were primarily the result of production from
recent drilling activity, most notably from the Company's two primary
development areas, the AWP Olmos Field and the Austin Chalk trend. The
Company's net sales volume (including the volumetric production payment)
in the first three months of 1997 increased by 43% or 1.8 Bcfe (billion
cubic feet equivalent) over volumes in the comparable 1996 period. Oil
and gas sales were also aided by 13% and 42% increases in average prices
received for oil and gas, respectively, between the two periods, as
highlighted in the table below.
The Company's $8.7 million increase in oil and gas sales during the
first quarter of 1997 was comprised of volume variances of $3.8 million
from the 1.7 Bcf increase in gas sales volumes and $0.1 million from the
7,100 barrel increase in oil sales volumes, while price variances
contributed $4.4 million from the increase in average gas prices received
and $0.4 million from the increase in average oil prices received. The
Company's 1997 oil and gas sales from the AWP Olmos Field were $11.1
million ($4.6 million in 1996) from 3.7 Bcfe of net sales volumes (2.1
Bcfe in 1996) for an increase of 1.6 Bcfe, while the Austin Chalk trend
generated oil and gas sales of $3.0 million ($1.6 million in 1996) from
1.0 Bcfe of net sales volume (0.7 Bcfe in 1996) for an increase of 0.3
Bcfe.
Revenues from oil and gas sales comprised 86% and 87%, respectively,
of total revenues for the first three months of 1997 and 1996. The
majority (82% and 71%, respectively), 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 program.
19
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED
The following table provides additional information regarding the
Company's oil and gas sales.
<TABLE>
<CAPTION>
Net Sales Volume Average Sales Price
Oil (Bbl) Gas (Mcf) Oil (Bbl) Gas (Mcf)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1996
3 Mos Ended 03-31-96 159,155 3,172,399 $17.78 $2.16
1997
3 Mos Ended 03-31-97 166,240 4,903,206 $20.13 $3.06
</TABLE>
Supervision fees increased 21%, having grown from $1.0 million in the
first three months of 1996 to $1.2 million in the first three months of
1997. This increase is primarily due to the annual escalation in well
overhead rates, and the increase in drilling activity by the Company,
which in turn increases the drilling well overhead portion of such fees.
Costs and Expenses
General and administrative expenses for the first quarter of 1997
increased approximately $138,000 or 10% when compared to the same period
in 1996. This increase in costs reflects the increase in the Company's
activities. However, the Company's general and administrative expenses
per Mcfe produced decreased by 23% from $0.35 per Mcfe produced for the
first quarter of 1996 to $0.27 per Mcfe produced for the comparable
period in 1997. The majority of the companies in the oil and gas industry
treat supervision fees as a reduction of their general and administrative
expenses. If the Company were to follow this practice, these expenses net
of supervision fees would have decreased from $0.10 per Mcfe produced for
the first three months of 1996 to $0.06 per Mcfe produced for the same
period in 1997.
Depreciation, depletion, and amortization ("DD&A") increased 65%
(approximately $2.1 million) for the first three months of 1997,
primarily due to the Company's reserves additions and associated costs
and to the related sale of increased quantities of oil and gas therefrom.
The Company's DD&A rate per Mcfe of production has increased from $0.79
per Mcfe produced in the 1996 period to $0.91 per Mcfe produced in the
1997 period, reflecting variations in the per unit cost of reserve
additions.
The Company's production costs per Mcfe increased from $0.45 per Mcfe
produced in the 1996 period to $0.47 per Mcfe produced in the 1997
period. This increase in rate per unit of production was due primarily to
remedial well work performed during the first quarter of 1997. Primarily
due to the 43% increase in production volumes, oil and gas production
costs increased 49% (approximately $915,000) in the first three months of
1997 when compared to the first three months of 1996. As discussed above,
the Company's increase in production is primarily through its drilling
activities in the AWP Olmos Field and Austin Chalk trend, where the
Company already has an established operating base. The increase in
production costs is partially offset by an exemption in these same fields
from the 7.5% Texas severance tax applicable to gas production from
20
<PAGE>
SWIFT ENERGY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTUNUED
certain natural gas wells certified to be in tight formations or to be
deep wells by the Texas Railroad Commission. Additionally, commencing
September 1, 1996, certain wells certified as "high cost gas" wells are
entitled to a reduction of severance tax based upon a formula amount, but
not the full exemption of 7.5% received on certified wells drilled prior
to September 1, 1996. Therefore, the increase in drilling activity and
production has not been accompanied by a proportionate increase in
operating costs. This tax exemption has had a positive impact on the
Company's production costs during 1996 and 1997, although under the new
rules, the proportionate amount of the exemption may be reduced in future
periods.
Interest expense in the first three months of 1997 on the 6.25%
Notes, including amortization of debt issuance costs, totaled $1,874,000
($497,000 in the 1996 period on the 6.5% Debentures), while commitment
fees on the credit facilities totaled $10,000 ($204,000 in the 1996
period for interest expense and commitment fees) for a total interest
expense of $1,884,000 (of which $535,000 was capitalized). In the first
three months of 1996, these costs totaled $701,000 (of which $629,000 was
capitalized). The Company capitalizes that portion of interest related to
its exploration, partnership, and foreign business development
activities. The increase in interest expense in 1997 is attributable to
the increase in interest incurred on the 6.25% Notes ($115.0 million)
compared to the 6.5% Debentures ($28.75 million), offset to some degree
by outstanding balances under the Company's credit facilities in 1996,
and by the $1.0 million in interest income earned on the unused to date
portion of the net proceeds on the 6.25% Notes.
21
<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 - N/A
Item 5. Other Information - N/A
Item 6. Exhibits & Reports on Form 8-K - None
22
<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: May 13, 1997 By: (Original Signed By)
------------ ----------------------------------
John R. Alden
Sr. Vice President - Finance
Chief Financial Officer, Secretary
Date: May 13, 1997 By: (Original Signed By)
------------ ----------------------------------
Alton D. Heckaman, Jr.
Vice President,
Controller and Principal
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Company's financial statements contained in its Quarterly report on Form 10-Q
for the period ended March 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 68,169,461
<SECURITIES> 0
<RECEIVABLES> 19,015,737
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 86,526,134
<PP&E> 277,589,231
<DEPRECIATION> (52,233,933)
<TOTAL-ASSETS> 318,333,568
<CURRENT-LIABILITIES> 34,017,296
<BONDS> 0
0
0
<COMMON> 152,372
<OTHER-SE> 146,758,152
<TOTAL-LIABILITY-AND-EQUITY> 318,333,568
<SALES> 18,369,651
<TOTAL-REVENUES> 21,245,469
<CGS> 0
<TOTAL-COSTS> 8,159,639<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349,631
<INCOME-PRETAX> 10,161,045
<INCOME-TAX> 3,391,782
<INCOME-CONTINUING> 6,769,263
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,769,263
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.41
<FN>
<F1>Includes depreciation, depletion and amortization expense and oil and gas
production costs. Excludes general and administrative and interest expense.
</FN>
</TABLE>
