Swift Energy Co. has agreed with Sonat Exploration Co., asubsidiary of Sonat Inc., to purchase for $87.6 million producingoil and gas properties that will increase its reserves by about25%. The deal signifies a redirection of Swift spending plans awayfrom drilling and to acquisition in light of depressed oil prices.

“With current lower crude oil prices, we have the opportunity topurchase high-quality, lower-risk producing properties from Sonatwith substantial upside potential that simply was not available inthe recent past. Consequently, we have deferred some portion of ourdrilling activity in favor of these acquisitions,” said A. EarlSwift, CEO of Swift.

As of April 1, the properties were estimated to have provedreserves of 91.1 Bcf of gas equivalents, of which 56% was gas.Estimated production for the interests being acquired is about 70MMcfe/d. Included in the purchase are extensive productionfacilities, interests in two gas processing plants and more than200,000 undeveloped net acres. The properties are being purchasedas proved producing assets and additional drilling activity beyondwells in progress will be scheduled only after economic drillingconditions improve. Properties to be purchased include all ofSonat’s interests in 156 producing gas and oil wells in theBrookeland Field in Southeast Texas and the Masters Creek Fieldarea in western Louisiana. Swift will assume operations of 113 ofthese wells. As part of the transaction, Swift is to acquireSonat’s 20% interest in both the Brookeland and the Masters Creekgas liquids plants, which together will have a combined capacity ofup to 250 MMcf/d.

“With these Sonat properties, the company will exceed itsreserves growth target for 1998 and coupled with its other plannedactivities, Swift believes its year-end proved reserves willincrease to over 500 Bcfe, of which 75% will be natural gas,” Swiftsaid. “At year-end, approximately 29% of Swift’s reserve base willbe located in the Austin chalk trend. The company’s 1998 productionwas previously forecasted to grow in excess of 30% over 1997, andwe expect to substantially exceed this goal. This forecasted growthshould translate into increased cash flow and earnings per sharefor 1998, even with the increased financing costs associated withfunding the acquisitions.”

Swift has been active in drilling and operating horizontal wellsin the Austin Chalk trend since 1992. The Masters Creek propertiesrepresent Swift’s first entry into the Louisiana portion of theAustin Chalk.

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