Attached files
file | filename |
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EX-21 - SWIFT ENERGY CO - SIGNIFICANT SUBSIDIARIES - SILVERBOW RESOURCES, INC. | subsidiaries.htm |
EX-31.1 - CEO CERTIFICATION - SILVERBOW RESOURCES, INC. | ceocertification.htm |
EX-31.2 - CFO CERTIFICATION - SILVERBOW RESOURCES, INC. | cfocertification.htm |
EX-23.2 - CONSENT OF ERNST AND YOUNG - SILVERBOW RESOURCES, INC. | auditorconsent.htm |
EX-23.1 - CONSENT OF HJ GRUY - SILVERBOW RESOURCES, INC. | reserveconsent.htm |
EX-12 - RATIOS OF EARNINGS TO FIXED CHARGES - SILVERBOW RESOURCES, INC. | ratioofearnings.htm |
EX-32 - CERTIFICATION OF CEO AND CFO - SILVERBOW RESOURCES, INC. | ceocfocertification.htm |
10-K - SWIFT ENERGY 2009 10-K - SILVERBOW RESOURCES, INC. | swiftenergy2009-10k.htm |
EX-10.27 - SIXTH AMENDMENT CREDIT AGREEMENT - SILVERBOW RESOURCES, INC. | sixthamendmencragrmnt.htm |
Swift
Energy
Company February
23, 2010
H.J.
GRUY AND ASSOCIATES, INC.
333
Clay Street, Suite 3850, Houston, Texas 77002 • TEL. (713) 739-1000 • FAX (713)
739-6112
Exhibit 99.1
February
23, 2010
Swift
Energy Company
16825
Northchase Drive, Suite 400
Houston,
Texas 77060
Re: Year-End
2009
S.E.C.
Reserves
Audit Letter
Ladies
and Gentlemen:
At your
request, we have independently audited the estimates of oil, natural gas, and
natural gas liquid proved reserves and future net cash flows effective December
31, 2009, that Swift Energy Company (Swift) attributes to net interests owned by
Swift. At the direction of Swift, we audited 96 percent of the total
company proved reserves. The audited reserves are located in the
Continental United States.
This
report, completed on January 29, 2010, has been prepared for Swift, and is
provided for inclusion in relevant U.S. Securities and Exchange Commission
registration statements or other Securities and Exchange Commission
filings.
Based on
our reserves audit, we consider the Swift estimates of net proved reserves and
net cash flows to be in reasonable agreement, in the aggregate, with those
estimates that would result if we performed a completely independent evaluation
effective December 31, 2009. Therefore, the audited Swift estimates
of proved reserve quantities are, in the aggregate, reasonable. We
find that all proved reserves are estimated by Swift in compliance with the
definitions contained in Securities and Exchange Commission Regulation S-X, Rule
4-10(a).
The Swift
estimated net reserves, future net cash flow, and discounted future net cash
flow are summarized below for the portion we audited.
Proved
Reserves
|
||||||||||||||||
Estimated
Net Reserves
|
Estimated
Future Net Cash Flow
|
|||||||||||||||
Oil,
NGL, & Condensate (Barrels)
|
Gas
(Mcf)
|
Not
Discounted
|
Discounted
at 10% Per Year
|
|||||||||||||
Proved
Developed
|
29,675,455 | 136,181,357 | $ | 1,186,102,744 | $ | 791,402,968 | ||||||||||
Proved
Undeveloped
|
32,902,113 | 132,687,255 | $ | 995,996,633 | $ | 548,316,898 | ||||||||||
62,577,568 | 268,868,612 | $ | 2,182,099,377 | $ | 1,339,719,866 | |||||||||||
The
discounted future net cash flows summarized in the above tables are computed
using a discount rate of 10 percent per annum. Future net cash flow
as presented herein is defined as the future cash inflow attributable to the
evaluated interest less, if applicable, future operating costs, ad valorem
taxes, and future capital expenditures. Future cash inflow is defined
as gross cash inflow less, if applicable, royalties and severance
taxes. Future cash inflow and future net cash flow stated in this
report exclude consideration of state or federal income tax. Future
costs of facility and well abandonments and the restoration of producing
properties to satisfy environmental standards are not deducted from cash
flow.
The term
reserves audit
as used herein conforms to the meaning of the same term as stated in
Regulation S-K, Item 1202. Our audit included examination, on a test
basis, of the evidence supporting the reserves discussed herein, and we find the
quality and quantity of available data to be sufficient for reserve
estimating. For each property included in the 96 percent coverage, we
examined the Swift estimating methods to the level of detail that we deem
appropriate to form the opinions presented herein. In various
instances, we independently estimated reserves to supplement our audit procedure
with a direct comparison to third party generated results.
We
recognize the methods and procedures employed by Swift to accumulate and
evaluate the necessary information, estimate reserves, and document
methodologies are effective and meet or exceed guideline
standards. Swift reserve estimates are based on extrapolation of
established performance trends, material balance calculations, volumetric
calculations, analogy with the performance of comparable wells, or a combination
of these methods. Reserve estimates from volumetric calculations or
from analogies may be less certain than reserve estimates based on well
performance obtained over a period during which a substantial portion of the
reserve was produced. In our judgment, Swift used appropriate
engineering, geologic, and evaluation principles that are consistent with
practices routinely accepted in the petroleum industry.
In our
judgment, there are no instances where local, state, or federal regulations will
materially impact the ability of Swift to recover the estimated proved
reserves.
The
primary economic assumptions in the Swift reserves estimating process include
the application of product prices, operating costs, and future capital
expenditures that are not escalated and therefore remain constant for the
projected life of each property. Product sales prices are based on an
average of 2009 first-day-of-the-month prices in accordance with Regulation S-X
guidelines. A price differential is applied to the oil, natural gas,
and natural gas liquids base prices to adjust for transportation, geographic
property location, and quality or energy content.
Estimates
of net cash flow and discounted net cash flow should not be interpreted to
represent the fair market value for the audited reserves. The
estimated reserves and cash flows discussed herein have not been adjusted for
uncertainty.
In
conducting this audit, we relied on data supplied by Swift. The
extent and character of ownership, oil and natural gas sales prices, operating
costs, future capital expenditures, historical production,
accounting,
geological,
and engineering data were accepted as represented, and we have assumed the
authenticity of all documents submitted. No independent well tests,
property inspections, or audits of operating statements were conducted by our
staff in conjunction with this work. We did not verify or determine
the extent, character, status, or liability, if any, of production imbalances,
hedging activities, or any current or possible future detrimental environmental
site conditions. This report is for general guidance, and
responsibility for subsequent decisions resides with the decision
maker. The above-described audit does not constitute a complete
independent reserves study of the oil and gas properties of Swift.
2
In order
to audit the reserves and future cash flows estimated by Swift, we have relied
on geological, engineering, and economic data furnished by our
client. Although we instructed our client to provide all pertinent
data, and we made a reasonable effort to analyze it carefully with methods
accepted by the petroleum industry, there is no guarantee that the volumes of
hydrocarbons or the cash flows projected will be realized. The
estimation of reserves is based on the application of a variety of technologies
and the subjective interpretation of collected data; therefore, the reserves
discussed herein are considered estimates only and should not be construed as
exact quantities. Future economic or operating conditions may affect
recovery of estimated reserves and cash flows, and reserves of all categories
may be subject to revision as more performance data become available or as
alternative estimating methods become applicable.
H.J. Gruy
and Associates, Inc. is a privately owned, independent consultancy, and
compensation for our efforts is not contingent upon the outcome of our
work. H.J. Gruy and Associates, Inc. and its employees have no direct
financial interest in Swift Energy Company or the properties audited nor do we
contemplate any future direct financial interest. Any distribution or
publication of this work or any part thereof must include this letter in its
entirety.
Yours very truly,
H.J. GRUY AND ASSOCIATES,
INC.
Texas Registration Number
F-000637
by: /s/ Marilyn
Wilson
Marilyn Wilson, P.E.
President and Chief Operating
Officer
MW:pab
t:\admin\s\swift\362\secreserves\secfilingattachltr.doc
H.J. GRUY AND ASSOCIATES,
INC. 333 Clay Street, Suite 3850, Houston, Texas 77002 •
(713) 739-1000
3