December
21, 2007
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Via:
EDGAR
Mr.
Brad Skinner
Senior
Assistant Chief Accountant
Division
of Corporation Finance
U.S.
Securities and Exchange Commission
100
F Street, N.E.
Washington,
D.C. 20549-7010
|
Re: Swift
Energy Company
Form
10-K for the Fiscal Year Ended December 31, 2006
Filed
March 1, 2007
Forms
10-Q for fiscal Quarters Ended March 31, 2007
And
June 30, 2007
Filed
May 4, 2007 and August 3, 2007
Response
letter dated October 15, 2007
File
No. 1-8754
Dear
Mr.
Skinner:
This
letter is in response to your letter dated December 7, 2007, regarding the
filing above. Each numbered item below corresponds to the numbered
item of your comment letter and is followed by the Company’s
response.
Form
10-Q for the Fiscal Quarters Ended March 31, 2007 and June 30,
2007
Notes
to Condensed Consolidated Financial Statements
Note
1 – Summary of Significant Accounting Policies
Full
Cost Ceiling Test, page 8
SEC
Comment:
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1.
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We
have considered your response to our prior comment number four in
which
you state you cannot reasonably estimate the potential write down
because
you do not know what oil and natural gas prices will be in future
periods. We note in paragraph 2 of SFAS 5 that not all
uncertainties inherent in the accounting process give rise to
contingencies. However, we believe that the ability to recover
the value of your oil and gas assets under the ceiling test represents
a
loss contingency covered by SFAS 5, as resolution of uncertainties
regarding future gas prices may confirm
the
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U.S.
Securities and Exchange Commission
December
21,
2007
Page 2
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impairment
of your oil and gas assets. Accordingly, please disclose that
an estimate of the possible loss or range of loss cannot be
made. In addition, enhance your discussion and analysis of your
critical thinking accounting policies related to the full-cost ceiling
test on page 58 to provide a sensitivity analysis showing the effect
that
reasonably likely changes in your estimates used in calculation of
the
ceiling test as of December 31, 2006, may have on your financial
position
and results of operations:
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Company
Response:
In
all
applicable future filings, disclosures regarding the ceiling test will also
include a disclosure that an estimate of the possible loss or range of loss
cannot be made, as we do not know what oil and gas prices will be in future
periods. As to the remainder of comment 1 which we
discussed with Mr. Newberry of the Staff on December 17, in all applicable
future filings containing a disclosure of "Critical Accounting Policies" in
Management's Discussion and Analysis, we will make all of the necessary/required
disclosures pursuant to Codification of Financial Reporting
501.14.
Engineering
Comments
Form
10-K for the Fiscal year ended December 31, 2006
Business,
page 4
Reserves
Replacement Ratio and Reserves Replacement cost, page
5
SEC
Comment:
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2.
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We
note your response to comment 6 in our letter of September 17,
2007. Provide a discussion of your reserve replacement cost
calculation similar to that which you have provided in your
response. Also, provide an additional reserves replacement cost
measure that includes the estimated costs to develop the proved
undeveloped reserves.
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Company
Response:
In
all
future filings in which a disclosure is made of reserve replacement costs,
we
will also disclose that such measure is calculated by including proved
undeveloped reserves but without including future development costs of
those reserves, as such a measure is traditionally based upon historical costs
and has been calculated on a basis believed to be that most commonly
used by professional research analysts in computing these ratios, and thus
is useful to public investors in making comparisons of this measure among our
industry
U.S.
Securities and Exchange Commission
December
21,
2007
Page 3
peers. In
our reserves replacement discussion (See page 5 of our 2006 Form 10-K), we
will
also refer to the Supplementary Information section regarding the Standardized
Measure of Discounted Future Net Cash Flows (See page 88 of our 2006 Form 10-K),
which discloses the future costs to develop our reserves base (commonly referred
to as future development costs).
Sales
volumes, Sales prices and Production Cost Information, page
16
SEC
Comment:
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3.
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In
our prior comment 14, we asked that you disclose your historical
oil and
gas prices so the reader is informed of the past effects of your
hedging
program. Our intent here is that you disclose your historical
prices before and after the effects of your hedging
program.
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Company
Response:
In
all
applicable future filings when the effects of our hedging program are material
as compared to our oil and gas sales, we will disclose these hedging effects
on
a per unit produced basis. As noted in our October 15, 2007 response,
we disclose hedging related gains and losses in the “Price-risk and other, net”
caption on our income statement. As such, our hedging gains and
losses are not included in our oil and natural gas sales prices.
Should
any additional information be required, or if you have any questions regarding
this letter or further comments, please contact our outside securities counsel,
Donald W. Brodsky, Baker & Hostetler, LLP, at 713.646.1335. Thank
you.
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Sincerely,
/s/
Alton D. Heckaman, Jr.
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Alton
D. Heckaman, Jr.
Executive
Vice President and
Chief
Financial Officer
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Attachments
cc: Securities
and Exchange Commission (via fax)
Swift
Energy Company
Terry
E.
Swift
Bruce
H. Vincent
Christopher
M. Abundis
Baker
&
Hostetler,
LLP
Donald
W. Brodsky