Swift Energy (SFY)

[dan_s]

This is one of our Small-Cap Growth Portfolio stocks, but the share price has done nothing but drift lower this year. I am expecting Q3 production to be up approximately 1,500 boepd to 32,000 boepd. If they report good Eagle Ford results the stock should draw a lot of attention.

An updated forecast model has been posted under the Watch List Tab.

If they are able to get a good price for their Central Louisiana package, which is now for sale, it should be a nice catalyst for the company. The sale would shore up the balance sheet and make the company heavily weighted to oil.

[cviller]

Dan,

Would you comment on Swift's debt. Most of your ideas have stronger balance sheets.

Any idea why the market is so afraid of Lightstream? The Chinese just picked up another Canadian junior. Could Lightstream be in anyone's sights?

Thanks.

[dan_s]

See Slide 19 of their current corporate presentation. They have more than enough liquidity to cover their capital program.

First of all, when you look at an E&P company's balance sheet remember that the assets are recorded at cost and not at their current value. If oil prices stay elevated, SFY's PV10 of their proven reserves at year-end should be much higher than what the assets are being carried at on the balance sheet.
Second, SFY is going to sell their Central Louisiana asset package soon, probably close a deal in six months. That will shore up the balance sheet and allow them to accelerate their Eagle Ford Shale development.

IMO the share price dipped because of the dip in production from Q1 to Q2. Based on their guidance, production will be ramping up in Q3 and Q4. Plus, their production mix will be more oil by year-end.