Swift Energy CEO Discusses Q3 2010 Results - Earnings Call Transcript
Swift Energy Co. (
)
Q3 2010 Earnings Call
November 04, 2010 10:00 am ET
Executives
Paul Vincent - IR
Terry Swift - Chairman & CEO
Alton Heckaman - EVP & CFO
Bruce Vincent - President
Bob Banks - EVP & COO
Analysts
Jason Wangler - Wunderlich Securities
Leo Mariani - RBC
Michael Hall - Wells Fargo
Derrick Whitfield - Canaccord
Brian Kuzma - Weiss Multi-Strategy
Presentation
Operator
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Swift Energy Co. Q3 2009 Earnings Call Transcript
Good morning, my name is Dorothy and I will be your conference operator today. At this time, I would like to welcome everyone to the Swift Energy third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions)
Thank you. I would now like to turn the call over to Mr. Paul Vincent, Director of Financial and Investor Relations. Sir, you may begin.
Paul Vincent
Good morning. I am Paul Vincent, Director of Finance and Investor Relations. I’d like to welcome everyone to Swift Energy’s third quarter 2010 earnings conference call. On today’s call, Terry Swift, Chairman and CEO, will provide an overview. Alton Heckaman, EVP and CFO will review the financial results for the third quarter and then Bruce Vincent, President; and Bob Banks, EVP and COO, will provide an operational update. Terry Swift will then summarize before we open it up to questions. Also present on the call are Jim Mitchell SVP Commercial Transactions & Land.
Before I turn it over to Terry, let me remind everyone that our presentation will contain forward-looking statements based on our current assumptions, estimates, and projections about us, our industry, and the current environment in which we operate. These statements involve risks and uncertainties detailed in our SEC reports to which we refer you along with cautionary statements contained in our press releases and our actual results could differ materially. We expect our presentation to take approximately 25 to 30 minutes and have allowed additional time for questions.
Terry Swift
Thanks Paul and thanks for everyone to listening for joining our conference call today. Before we discuss third quarter operational and financial results I believe its necessary to take a pit stop and review how strongly Swift Energy has positioned despite the current economic and operating environment. Our resource base currently includes (inaudible) production, low risk oil development opportunities and deeper mature exploitation and exploration inventory in South Louisiana. In south Texas approximately 79,000 perspective acres in the Eagle Ford shale and approximately 41,000 perspective acres in the almost tight gas ms plus over 100,000 net acres prospected for Austin Chalk in Central Louisiana and East Texas. We have two joint venture in place with leading oil and gas companies to accelerate the development of our resource base in addition to production infrastructure, gathering, processing and transportation capacity to bring hydrocarbons to the market. We also contractual secured three high power drillings rigs for our 2011 south Texas operations. Financially our balance sheet is in excellent shape, we extended our $300 million borrowing base through 2015 and expect the borrowing base to increase as our production and reserve base grows. Our current exposure to a large growing liquid rich resource base coupled with a financial strength liquidity to develop it place Swift Energy in a unique position to develop multi-year high return production and reserve growth. As most industry participants and observers know demand for critical oil field services have got strong over the past six months.
This rapid increase in demand has impacted both the availability and performance of providers and vendors especially high pressure pumping services for fracture simulation. In many cases previously agreed upon frac schedules have been delayed or canceled. While this represents additional challenges to meeting forecast and performance targets, Swift Energy remains committed to improved performance and efficient execution of its operating plans.
These scheduling delays have resulted in a significant backlog and industry wells awaiting fracture stimulation. As of the end of the third quarter, we had 12 horizontal wells waiting on fracture stimulation, with our current drilling activity we expect to have 9 to 12 horizontal wells waiting on fracture stimulation services by the end of the year.
This number of backlog completions is well above our original expectations and has reduced our full year production and lowers our year end exit rate target. Starting in the fourth quarter, Swift Energy began using dedicated fracture stimulation equipment and services under our completion services agreement. This increased control of our completion activity in South Texas combined with a recent completion performance improvements gives us confidence that our adjusted performance targets will be met.
However, as a result of the uncertainty and high pressure pumping service scheduling and performance for much of 2010, we are lowering our forecast during corporate daily production rate to 26,000 to 28,000 net barrels of oil equivalent per day. This new range is a 15% to 24% increase from our third quarter average daily production rate of 22,500 barrels of oil equivalent per day. The impact of this unexpected scheduling device is approximately 525,000 barrels of oil equivalent of production which will be delayed past the end of this year.
As a result our full year 2010 production is expected to be 8.3 to 8.5 million barrels of oil equivalent. This equates to a 2 to 9% sequential increase in four quarter production over third quarter 2010. Our focus on liquid rich opportunities will result in our production mix remaining approximately 60% liquid at year end 2010. Based on year-to-date drilling and appraisal program, we expect our year end 2010 reserve to increase by 15 to 20% over last years year end level.
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