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Swift Energy (NYSE:SFY) saw a record 2007 and is on track to have another outstanding year as crude and natural gas prices soar.

Swift beat Wall Street estimates in each of the last four quarters by an average of 8.29%. Even though the stock has surged this year, Swift is trading at only 6.97 times its forward earnings.

Company Profile

Swift Energy Company is an independent oil and natural gas company with properties on the onshore and inland-water areas of Texas and the Louisiana Gulf Coast. The company is headquartered in Houston.

Swift, a Zacks #1 Rank (Strong Buy), has operations in three regions: South Louisiana, South Texas and Toledo Bend, a region along the Texas-Louisiana border. The company has a strategy of using acquisitions and drilling to grow oil and gas reserves, production and cash flow.

New Zealand Assets Sold

On June 13, Swift announced that it had closed on its previously announced sale of its New Zealand assets for the sales price of $82.7 million. The company said the proceeds would be used to pay down a part of the outstanding balance on the company's bank line.

The rest of the New Zealand assets are expected to close in the next few months.

Swift Beats Wall Street Estimates for the Fifth Quarter in a Row

On May 8, Swift Energy reported its first quarter earnings and surprised on estimates by 6.62%. Net income rose 88% to $49.8 million, or $1.61 per share compared to $26.4 million, or 87 cents per share, in the first quarter of 2007. Analysts expected $1.51 per share.

Revenues jumped 53% to $199 million from $130.1 million in the first quarter 2007 due primarily to higher crude and natural gas prices. The average crude oil price for the quarter rose 72% to $99.43 per barrel from $57.87 per barrel in 2007. Natural gas prices gained 35% to $7.97 from $5.92 per thousand cubic feet.

Production increased 1% to 2.57 million barrels of oil equivalent (MMBoe) from 2.53 MMBoe in the year-ago period.

SFY Raises Capital Outlay for 2008

With crude prices continuing to rise, the company increased its 2008 capital outlays guidance from $425 to $475 million to the range of $475 to $525 million. The increase in spending will fund exploration in South Louisiana and South Texas.

Analysts Estimates Skyrocket

As commodities prices stay near record highs, consensus estimates have soared. Consensus estimates for the second quarter are up 96% in the last 90 days to $2.18 from $1.11 per share.

Full year estimates have also jumped 74% to $8.82 from $5.07 per share. Analysts estimate year over year earnings growth in 2008 of 77.02%.

Swift's Value Characteristics

Swift Energy is cheap. Its forward P/E is only 6.97. Its price-to-book is 2.27, under the industry average of 3.3. The company has an outstanding five year average return on equity [ROE] of 16.80%.

Source: Swift Energy Blows Past Wall Street Estimates