SOURCE: FX Energy, Inc.

May 08, 2014 16:00 ET

FX Energy Reports Improved First Quarter Results

SALT LAKE CITY, UT--(Marketwired - May 8, 2014) - FX Energy, Inc. (NASDAQ: FXEN) today announced financial results for its first quarter ended March 31, 2014. The Company reported a first quarter net loss of $1.0 million, or $(0.02) per share. This compares to a net loss of $11.4 million, or $(0.22) per share, for the first quarter of 2013. Included in the Company's quarterly results were noncash, intracompany foreign exchange losses of $1.2 million and $9.1 million in 2014 and 2013, respectively. Without the foreign exchange losses, the Company would have recorded net income of $0.3 million for the quarter ended March 31, 2014, and a net loss of $2.3 million for the quarter ended March 31, 2013.

Higher Polish Gas Prices Offset Minor Production Declines

Total revenues for the first quarter of both 2014 and 2013 were $9.5 million. Oil and gas revenues increased by approximately $62,000 from quarter to quarter. Higher natural gas prices in Poland offset slight declines in production.

The average price received in Poland for the first quarter of 2014 was $7.42 per Mcf, compared to $7.18 per Mcf for the first quarter of 2013. The Polish low-methane tariff, which serves as the basis for the Company's gas sales agreements, increased by 3.1% effective February 1, 2014. In addition, period-to-period strengthening in the Polish zloty produced a higher U.S. dollar-denominated average price in the first quarter of 2014. Unlike the U.S., demand for natural gas exceeds domestic Polish supplies and Poland imports most of the natural gas it uses. The higher natural gas prices of Poland versus those in the U.S. is one of the reasons for the Company's focus on Poland.

Higher oil prices and production led to a slight increase in quarterly oil revenues. Oil revenues of $920,000 in the first quarter of 2014 were 2% higher than $900,000 during the first quarter of 2013. Oil prices averaged $76.91 per barrel in the first quarter of 2014, compared to $76.46 per barrel in the same quarter of 2013. Oil production increased by 2% over 2014 levels. Currently all of the Company's oil production is in the U.S., mostly from a relatively small and stable oil field in Montana. This oil is a relatively heavy grade of crude and sells at a discount to the standard WTI price.

Total net oil and gas production during the first quarter of 2014 was 1,229 million cubic feet equivalent (Mmcfe) a daily average of 13.6 Mmcfe/d. First quarter 2013 production was 1,261 Mmcfe, a daily average of 14.0 Mmcfe/d. Production declines at the Company's Roszkow and Zaniemysl wells were mostly offset by increases at the Winna Gora, Lisewo-1 and Komorze 3-K wells.

The Company expects production to begin at its Lisewo-2 well during the second half of 2014, which should add approximately 1.7 Mmcf/d of net production.

Operating Cash Largely Unchanged

Net cash provided from operating activities was $4.4 million during the first quarter of 2014, compared to $4.5 million during the 2013 first quarter. Exploration expenses during the first quarter of 2014 were $3.1 million lower than during the same quarter of 2013, most of which was attributed to a dry hole drilled during 2013. These lower costs were mostly offset by changes in other working capital items.

Noncash Charges Continue to Vary

The noncash foreign exchange losses of $1.2 million and $9.1 million for the first quarters of 2014 and 2013, respectively, are included in other income and expense. These figures come primarily from recognition of gains and losses on U.S. dollar-denominated, intercompany loans from FX Energy, Inc., to FX Poland, its wholly owned subsidiary. These are noncash gains and losses and could vary greatly depending upon future exchange rate changes. Two factors contributed to the lower foreign exchange loss during the 2014 quarter. First, during 2013, we converted approximately $45 million of loans between FX Energy Poland and FX Energy, Inc., to equity. The conversion was necessary in order to make future interest payments from FX Energy Poland to FX Energy, Inc., tax deductible in Poland. Second, exchange-rate fluctuation from year-end 2013 to March 31, 2014, of 1% was less than the exchange-rate fluctuation from year-end 2012 to March 31, 2013, of 2%. The lower amounts of intercompany loans outstanding and the decrease in exchange rate volatility resulted in a lower foreign exchange impact in 2014 compared to 2013.

Earnings Conference Call Today, Thursday, May 8, 2014, at 4:30 PM EDT (2:30 PM MDT)

The Company will host a conference call and webcast May 8, 2014, to discuss 2014 first quarter results and update operational items at 4:30 p.m. Eastern Daylight Time. Conference call information is as follows: US dial-in-number: 888-430-8701; International dial-in-number: 719-325-2298; Passcode: 9873981. Request: FX Energy, Inc. Conference Call.

The call will also be webcast live and interested parties may access the webcast through FX Energy's homepage at www.fxenergy.com. For those who are unable to participate in the live call, a rebroadcast will be available through the Company's website for two weeks beginning one hour after the completion of the call.

About FX Energy

FX Energy is an independent oil and gas exploration and production company with production in the US and Poland. The Company's main exploration and production activity is focused on Poland's Permian Basin where the gas-bearing Rotliegend sandstone is a direct analog to the Southern Gas Basin offshore England. The Company trades on the NASDAQ Global Select Market under the symbol FXEN. Website www.fxenergy.com.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. Forward-looking statements are not guarantees. For example, exploration, drilling, development, construction, or other projects or operations may be subject to the successful completion of technical work; environmental, governmental or partner approvals; equipment availability; or other things that are or may be beyond the control of the Company. Operations that are anticipated, planned, or scheduled may be changed, delayed, take longer than expected, fail to accomplish intended results, or not take place at all.

In carrying out exploration, it is necessary to identify and evaluate risks and potential rewards. This identification and evaluation is informed by science but remains inherently uncertain. Subsurface features that appear to be possible traps may not exist at all, may be smaller than interpreted, may not contain hydrocarbons, may not contain the quantity or quality estimated, or may have reservoir conditions that do not allow adequate recovery to render a discovery commercial or profitable. Forward-looking statements about the size, potential, or likelihood of discovery respecting exploration targets are certainly not guarantees of discovery, the actual presence or recoverability of hydrocarbons, or the ability to produce in commercial or profitable quantities. Estimates of potential typically do not take into account all the risks of drilling and completion nor do they take into account the fact that hydrocarbon volumes are never 100% recoverable. Such estimates are part of the complex process of trying to measure and evaluate risk and reward in an uncertain industry.

Forward-looking statements are subject to risks and uncertainties outside FX Energy's control. Actual events or results may differ materially from the forward-looking statements. For a discussion of additional contingencies and uncertainties to which information respecting future events is subject, see FX Energy's SEC reports or visit FX Energy's website at www.fxenergy.com.

   
FX ENERGY, INC., AND SUBSIDIARIES  
Consolidated Balance Sheets  
(Unaudited)  
(in thousands)  
   
    March 31,     December 31,  
    2014     2013  
ASSETS                
                 
Current assets:                
  Cash and cash equivalents   $ 14,258     $ 11,153  
  Receivables:                
    Accrued oil and gas sales     4,313       3,464  
    Joint interest and other receivables     1,574       5,029  
    VAT receivable     826       1,847  
  Inventory     102       100  
  Other current assets     336       234  
    Total current assets     21,409       21,827  
                 
Property and equipment, at cost:                
  Oil and gas properties (successful-efforts method):                
    Proved     90,631       85,244  
    Unproved     2,527       2,404  
  Other property and equipment     12,079       11,857  
    Gross property and equipment     105,237       99,505  
  Less accumulated depreciation, depletion, and amortization     (24,646 )     (23,369 )
      Net property and equipment     80,591       76,136  
                 
Other assets:                
  Certificates of deposit     406       406  
  Loan fees     2,178       2,323  
      Total other assets     2,584       2,729  
                 
Total assets   $ 104,584     $ 100,692  
                 
                 
                 

-Continued-

   
FX ENERGY, INC., AND SUBSIDIARIES  
Consolidated Balance Sheets  
(Unaudited)  
(in thousands, except share data)  
-Continued-  
   
    March 31,     December 31,  
    2014     2013  
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities:                
  Accounts payable   $ 8,034     $ 9,694  
  Accrued liabilities     306       833  
    Total current liabilities     8,340       10,527  
                 
Long-term liabilities:                
  Notes payable     50,000       45,000  
  Asset retirement obligation     1,721       1,620  
    Total long-term liabilities     51,721       46,620  
                   
      Total liabilities     60,061       57,147  
                 
Stockholders' equity:                
  Preferred stock, $0.001 par value, 5,000,000 shares authorized as of March 31, 2014, and December 31, 2013; no shares outstanding     --       --  
  Common stock, $0.001 par value, 100,000,000 shares authorized as of March 31, 2014, and December 31, 2013; 53,912,277and 53,733,398 shares issued and outstanding as of March 31, 2014, and December 31, 2013, respectively     54       54  
  Additional paid-in capital     227,394       226,060  
  Cumulative translation adjustment     15,631       15,025  
  Accumulated deficit     (198,556 )     (197,594 )
  Total stockholders' equity     44,523       43,545  
                 
Total liabilities and stockholders' equity   $ 104,584     $ 100,692  
                 
                 
                 
FX ENERGY, INC., AND SUBSIDIARIES  
Consolidated Statements of Operations and Comprehensive Income  
(Unaudited)  
(in thousands, except per share amounts)  
   
    For the Three Months Ended  
    March 31,  
    2014     2013  
Revenues:                
  Oil and gas sales   $ 9,508     $ 9,446  
  Oilfield services     5       42  
    Total revenues     9,513       9,488  
Operating costs and expenses:                
  Lease operating expenses     1,109       876  
  Exploration costs     3,320       6,371  
  Property impairments     46       --  
  Oilfield services costs     128       132  
  Depreciation, depletion, and amortization     1,358       1,316  
  Accretion expense     24       22  
  Stock compensation     679       689  
  General and administrative costs     1,953       1,824  
    Total operating costs and expenses     8,617       11,230  
Operating income (loss)     896       (1,742 )
                 
Other income (expense):                
  Interest expense     (656 )     (628 )
  Interest and other income     14       52  
  Foreign exchange loss     (1,216 )     (9,125 )
    Total other expense     (1,858 )     (9,701 )
                 
Net loss   $ (962 )   $ (11,443 )
                 
Basic and diluted net loss per common share   $ (0.02 )   $ (0.22 )
                 
Basic weighted average number of shares outstanding     53,232       52,704  
                 
Diluted weighted average number of shares outstanding     53,232       52,704  
                 
Other comprehensive loss:                
  Foreign currency translation adjustment     606       5,876  
Comprehensive loss   $ (356 )   $ (5,567 )
                 
                 
                 
FX ENERGY, INC., AND SUBSIDIARIES  
Consolidated Statements of Cash Flows  
(Unaudited)  
(in thousands)  
   
    For the Three Months Ended  
    March 31,  
    2014     2013  
Cash flows from operating activities:                
  Net loss   $ (962 )   $ (11,443 )
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation, depletion, and amortization     1,358       1,316  
    Accretion expense     24       22  
    Property impairment     --       207  
    Amortization of bank fees     127       130  
    Stock compensation     679       689  
    Foreign exchange losses     1,213       9,110  
    Common stock issued for services     655       694  
  Increase (decrease) from changes in working capital items:                
    Receivables     3,531       5,765  
    Inventory     (2 )     (1 )
    Other current assets     (102 )     (14 )
    Accounts payable and accrued liabilities     (2,121 )     (1,977 )
      Net cash provided by operating activities     4,400       4,498  
                 
Cash flows from investing activities:                
  Additions to oil and gas properties     (5,975 )     (5,329 )
  Additions to other property and equipment     (232 )     (192 )
      Net cash used in investing activities     (6,207 )     (5,521 )
                 
Cash flows from financing activities:                
  Proceeds from notes payable     5,000       --  
      Net cash provided by financing activities     5,000       --  
                 
Effect of exchange rate changes on cash     (88 )     (475 )
                 
Net increase (decrease) in cash     3,105       (1,498 )
Cash and cash equivalents at beginning of year     11,153       33,990  
                 
Cash and cash equivalents at end of period   $ 14,258     $ 32,492  
                 

Contact Information

  • SCOTT J. DUNCAN
    FX Energy, Inc.
    3006 Highland Drive, Suite 206
    Salt Lake City, Utah 84106
    (801) 486-5555
    Fax (801) 486-5575
    www.fxenergy.com