Houston-based independent Swift Energy Co., whose core operations are focused onshore Louisiana and Texas, said Monday it will purchase the interests in five oil and gas properties in South Louisiana from BP America Production Co. for $175 million. Production is about 75% natural gas, with proved reserves estimated at 58.2 Bcfe and probable reserves estimated at 28.1 Bcfe.

Swift will buy interests in BP’s Bayou Sale, Horseshoe Bayou and Jeanerette fields, all located in St. Mary Parish, as well as the High Island field in Cameron Parish and the Bayou Penchant field in Terrebonne Parish. The acquisition is expected to close in the next two months, with an effective date of April 1. Swift plans to fund the purchase mostly with cash on hand and also debt. Under terms of the agreement, Swift will acquire the majority working interest in BP’s operated wells in the fields and varying levels of working interest in certain nonoperated wells.

About 67% of the proved reserves are classified proved developed, and future development costs of both the proved and probable reserves are estimated to be $45.0 million for an all-in acquisition cost of $2.55/Mcfe of proved and probable reserves, Swift noted. Production averaged 12 MMcfe/d net to the purchased working interests in the first six months of this year.

“This strategic acquisition is a perfect fit with Swift Energy’s current operations in our South Louisiana operating region,” said CEO Terry Swift. “The proximity of these operations to our Cote Blanche Island (CBI) field provides operating synergies, and more importantly from a development and exploration perspective, three of these fields are located within the coverage area of Swift Energy’s existing 3-D seismic library. These factors provide tremendous advantages in the exploration and development of these properties, allowing us to use our experience and existing resources to enhance the value of these fields. Over the next 12-18 months, our technical teams will further quantify the hydrocarbon potential of this area.”

Bayou Sale and Horseshoe Bayou fields are adjacent to each other and located 13 miles southeast of Swift’s CBI field. Production from these fields averaged 6.3 MMcfe/d net to the purchased interests during the first half of 2006 from formations at depths ranging from 10,000 to 14,000 feet. The company has identified up to 15 drilling opportunities in this area.

The Bayou Penchant field is located 44 miles southeast of CBI and would be a nonoperated field, with Swift holding a 50% stake. Bayou Penchant production averaged about 2.5 MMcfe/d during the first half of 2006, net to the purchased interests. The High Island field is 65 miles west of CBI, and its production has been averaging 2.0 MMcfe/d over the first six months of 2006. The Jeanerette field is positioned on the flank of a large salt dome and 12.5 miles to the north of CBI. The field averaged a net production rate of 1.2 MMcfe/d in the first half of the year.

Once the BP purchase is completed, Swift estimates the five fields will increase its 4Q2006 production by 0.6-1.0 Bcfe if no preferential rights are exercised. The company plans to initiate an exploitation and development program in 2007 to drill proved undeveloped and probable locations, recomplete several wells, enhance facilities and improve per-unit operating costs. Swift expects its 2007 budget will include $20-25 million of capital expenditures in these five fields.

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