OPERATIONS

Swift is banking on NZ gas

The tightening New Zealand gas market and strengthening Kiwi dollar mean Houston-headquartered Swift Energy is making money from gas - once considered worse than a dry hole in this land of the long white cloud.

Swift is banking on NZ gas

When Swift first came to New Zealand in the late 1990s, explorers often regarded striking gas as the worst outcome for a well in the then low-priced market dominated by the Maui field. At least they could write-off the cost of a dry hole.

Late last week Swift Energy announced record 2003 revenues and production, including significant contributions from its gas-driven New Zealand operations.

Its total US and NZ revenues were US$209 million, with New Zealand now accounting for 36% of corporate production, with 19.4 bcfe produced in 2003, an increase of 25% from the 15.5 bcfe produced in 2002.

New Zealand now accounts for 21% of the company’s total proved reserves, with Kiwi reserves increased 13% to 176 bcfe.

This country’s ever strengthening gas market is graphically illustrated by the fact that gas prices are increasing at a faster rate than the kiwi dollar has been climbing against the Greenback. The Kiwi appreciated 25% against the Greenback during 2003.

Swift Energy New Zealand received an average natural gas price of US$1.83 per thousand cubic feet (Mcf) for 2003 under its long-term contracts, a 38% increase over the US$1.32 received in 2002; while the average price in December 2002 was US$1.40 but had jumped by 54% to US$2.15 last December.

Swift Energy believes the price for its New Zealand gas during the first 2004 quarter will be US$2.15-2.35 and the average for the year, US$2.20-2.40. New Zealand gas prices are fixed contractual ones with major power generators in New Zealand and subject to currency exchange rates.

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