Saturday, March 7, 2015

Swift Energy: The Good, The Bad, And The Ugly

This article was first published by Seeking Alpha on February 12, 2015.

By Sarfaraz A. Khan

Following the 50% drop in oil prices since mid-2014, several oil and gas producers in the U.S. have slashed their capital budgets. Overall, analysts at Goldman Sachs have predicted 30% decline in North American land spending in 2015. A handful of companies, such as Pengrowth Energy (NYSE:PGH), MEG Energy (OTCPK:MEGEF), Legacy Reserves (NASDAQ:LGCY) and Warren Resources (NASDAQ:WRES), have cut their budgets by more than 70%. Among this group is the small Houston-based energy company Swift Energy (NYSE:SFY).

Swift Energy, with a market cap of $132.4 million, focuses on producing oil and gas from onshore fields in Texas and Louisiana and from inland waters of Louisiana. At the end of 2013, Swift Energy had estimated proved reserves of 219.2 million barrels of oil equivalents, which were 62% natural gas, 24% crude oil and 14% natural gas liquids. Nearly 80% of the company's proved reserves are located in Texas, where the company is focusing on developing its Eagle Ford properties, while 20% are in Louisiana. Around 40% of the company's total proved reserves are located in Eagle Ford's Fasken region.

The Good

Earlier in January, Swift Energy said that it will reduce its 2015 capital budget to between $100 million and $125 million, which shows a drop of between 70% and 75% from 2014. The reduction, which was attributed to the plunge in oil prices, was greater than market's consensus 2015 capital expenditure forecast of $225 million, as per a recent report from Raymond James's analyst Andrew Coleman emailed to me .… read full article at Seeking Alpha