“Having recently conducted our first 60 acre downspacing test in LaSalle County, we are encouraged that we will have downspacing opportunities within our Eagle Ford inventory. Further downspacing tests may lead to increased drilling inventories in this liquids rich area.
“Swift Energy is still on track to have double digit production and reserves growth for 2012. While we intend to grow daily production levels in the fourth quarter of this year, as noted earlier, we have taken steps to significantly reduce our capital spending levels in 2013. This approach will allow us to balance production growth targets with an emphasis on maintaining financial strength and ample liquidity in an uncertain commodity price environment, while still achieving our long term strategic growth objective.”
Third Quarter Revenues and Expenses
Total revenues for the third quarter of 2012 decreased 10% to $128.8 million from the $142.5 million generated in the third quarter of 2011. This decrease is primarily attributable to lower realized commodity prices during the 2012 period.Depreciation, depletion and amortization expense (“DD&A”) of $20.52 per barrel of oil equivalent (“Boe”) in the third quarter of 2012 decreased 4% from $21.40 per Boe in the comparable period in 2011 due to the addition of reserves in tandem with the realization of capital cost efficiencies. Lease operating expenses, before severance and ad valorem taxes, were $9.26 per Boe in the third quarter 2012, a 10% decrease when compared to $10.31 per Boe in the same period of 2011, also driven by higher production levels during the 2012 period. Severance and ad valorem taxes decreased to $3.72 per Boe in the third quarter 2012 from $5.32 per Boe in the third quarter of 2011 primarily due to lower prices realized per barrel of oil equivalent. General and administrative expenses decreased to $4.16 per Boe during the third quarter of 2012, down from $4.48 per Boe in the same period in 2011 as a result of higher production levels. Interest expense increased to $4.79 per Boe in the third quarter of 2012 compared to $3.32 per Boe for the same period in 2011 due to new long term debt that was issued during the fourth quarter of 2011.