Time is fleeting for Swift Energy Co. (NYSE: SFY) ever since the Houston company decided to skip an interest payment on its debt.

Earlier this month, natural-gas producer Swift said it elected to not make the $8.9 million semi-annual interest payment on its outstanding $250 million senior notes that was due on Dec. 1. As a result, the company is now facing a potential default as it races against the clock to dig itself out of heaping debt.

Swift said Dec. 1 it had the money to cover the interest payment, but wanted more time to negotiate restructuring its debt with bondholders. The company is also considering other “possible avenues for increasing near-term liquidity.”

"We view the decision to withhold payment on their senior notes as a sign that negotiations to restructure the balance sheet are not progressing as planned," said Gordon Douthat, senior analyst with Wells Fargo Securities LLC, in a Dec. 2 report.

If a decision is not made by Dec. 31 the company will face a default, which would trigger cross default provisions for the credit facility and other senior notes, Douthat said.

Swift has about $1.2 billion in debt including its credit facility and assets of $1.02 billion as of September.

According to Douthat, in order to survive the $1.2 billion in debt it faces Swift will need to sell assets.

Shedding some of its assets would not only solidify its balance sheet, but also "allow for an improved growth profile beyond 2015," he said.

Though given the marginal economics at current prices and its limited liquidity to carry out a drilling program, Swift has little breathing room for equity value, he added.

Eagle Ford Gold

Swift has three core areas of operation in Louisiana and Texas, including in the Eagle Ford Shale. The company’s operations are largely focused in the Eagle Ford, where it has two operated rigs currently drilling its South Texas core area.

During the third quarter, the company drilled five operated development wells and completed eight wells. The company's average drilling well cost in Fasken for the quarter was $2.2 million compared to $2.4 million in the second quarter of 2015.

Also during the quarter, the company completed a new enhanced completion design testing the Upper Eagle Ford in the Fasken area of its core acreage. The test well was completed with a 32-stage frack job and 15 million pounds of proppants, which is 40% more proppant than previously completed wells.

Activity levels in the fourth quarter will focus on drilling activity in the dry gas Fasken area as well as in the AWP gas and condensate areas in the Eagle Ford. The company plans to fund operations using its revolving credit facility and cash flow.

Swift has maintained its previously planned full-year capex of $110- to $120 million for 2015.

The company said Dec. 1 its continuing to pay suppliers and trade creditors and fund current operations on an ongoing basis.

The company has retained Lazard to advise its management and board with respect to realigning its balance sheet, in addition to addressing financing alternatives and enhancing its liquidity profile.

The company has also hired the law firm of Jones Day to serve as its restructuring counsel and Alvarez & Marsal North America LLC to serve as its financial adviser.

Contact the author, Emily Moser, at emoser@hartenergy.com.