Pogo Producing Co.’s net income in 2002 increased to $107 million, or $1.85 per share, from $88 million, or $1.72/share, in 2001. Chairman Paul G. Van Wagenen said the company replaced its production for the eleventh consecutive year despite having record production. Much of the increase came from Pogo’s successful drilling in the Gulf of Mexico as well as from steady production growth in the Gulf of Thailand, he said. Pogo’s 2002 fourth quarter net income was $37.8 million, or $0.62 per share, compared to $1.4 million, or $0.03 per share in 2001. Discretionary cash flow in 2002 was $492.9 million, up 31%. In the fourth quarter of 2002, discretionary cash flow was $135.8 million compared to $67.5 million in the fourth quarter 2001. “Pogo enjoyed exceptional results with the drill bit in 2002,” said Van Wagenen. “The company drilled a worldwide total of 172 gross wells, 159 of which were successfully completed, a 92% success rate. For a company with a meaningful exploration program, that ratio is truly extraordinary.” Pogo added enough new proven oil and natural gas reserves to replace an estimated 122% of its 2002 worldwide production. New reserves added in the United States reflect a 129% domestic production replacement rate. Pogo’s year-end estimated equivalent proven oil and natural gas reserves rose to 1.6 Tcf. Pogo’s 2002 daily production of natural gas averaged 279 MMcf/d, up 17% from 2001. In the fourth quarter, natural gas production averaged 282.1 MMcf/d, up 13% from the fourth quarter of 2001. Pogo’s board approved a $320 million capital and exploration budget for 2003, which compares to $362 million in 2002. “Pogo plans to drill an unprecedented number of exploration and development wells in 2003: 226 gross wells, including 62 in the Gulf of Thailand, six in Hungary and one in the Denmark North Sea. It will be our most aggressive drilling schedule to date,” said Van Wagenen.

Swift Energy said it expects to report an increase of 15-16% in year-end 2002 proved reserves to 740-750 Bcfe compared to 646 Bcfe at year-end 2001. For 2002, Swift expects to report reserve replacement of 290-310% of 2002 production with finding and development costs of $1.00-1.10 per thousand cubic feet equivalent (Mcfe). Domestic proved reserves are expected to increase by 8-9% to 586-594 Bcfe with a reserve replacement of 222-246% of 2002 domestic production at a finding cost of $0.80-0.88 per Mcfe. The increase in domestic proved reserves is primarily attributable to drilling activity in the Lake Washington Field, where proved reserves increased by 150% to 180 Bcfe from 73 Bcfe at the end of 2001. Production for 2002 is expected to increase 10-11% to 49.8 Bcfe compared to the 44.8 Bcfe produced in 2001. For the fourth quarter 2002, production totaled about 12.6 Bcfe with domestic activity contributing 7.6 Bcfe and New Zealand contributing 5 Bcfe, a 10% increase from the 11.5 Bcfe of production during the same quarter in 2001, and an increase of about 3% from the 12.2 Bcfe produced in the third quarter of 2002. “We set out in 2002 to meet certain objectives, which included both operational and financial targets, and we have accomplished nearly all of these,” said CEO Terry Swift. “One of the more significant objectives was to stabilize and reduce the overall production decline profile for the company, which we have done. Additionally, we wanted to increase our reserves and production by at least 10%, while at the same time decreasing the percentage of our proved undeveloped reserves from 50% to 40%, and we have accomplished these goals as well… We believe that we can continue to build upon these accomplishments and increase value for our shareholders as we move forward in 2003.” The company currently plans to spend $115-130 million in 2003, excluding any acquisitions. The company currently estimates that both proved reserves and production will increase between 7-12% in 2003.

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