| FOR IMMEDIATE RELEASE | SCOTT J. DUNCAN |
| | FX Energy, Inc. |
| August 11, 2014 | 3006 Highland Drive, Suite 206 |
| | Salt Lake City, Utah 84106 |
| | (801) 486-5555 Fax (801) 486-5575 |
| | www.fxenergy.com |
FX Energy Reports Second Quarter Results;
Second Quarter Revenues Up 24% From Last Year
Salt Lake City, August 11, 2014 – FX Energy, Inc. (NASDAQ: FXEN) today announced financial results for its second quarter ended June 30, 2014. The Company reported a second quarter net loss of $4.5 million, or $(0.08) per share. This compares to a net loss of $10.6 million, or $(0.20) per share, for the second quarter of 2013. Included in the Company’s quarterly results were noncash (and intercompany) foreign exchange losses of $0.7 million in 2014 and $3.4 million in 2013. Without the foreign exchange losses, the Company would have recorded net losses of $3.8 million and $7.2 million for the quarters ended June 30, 2014 and 2013, respectively.
Higher Oil and Gas Prices Boost Second Quarter Revenues
Oil and gas revenues were $8.8 million during the second quarter of 2014, up 7% compared to the $8.2 million during the same quarter of 2013. Total revenues were $10.2 million for the 2014 second quarter, up 24% compared to the $8.2 million for the same quarter in 2013.
Gas prices during the second quarter of 2014 averaged $7.56 per Mcf, compared to $6.97 per Mcf during the same quarter of 2013, an increase of 9%. Prices for the Company’s U.S. oil production also increased. Oil prices increased 8% over the year, averaging $83.62 per barrel in the second quarter of 2014, compared to $77.30 per barrel in the same quarter of 2013.
Total net oil and gas production was virtually unchanged at 1,103 million cubic feet equivalent (Mmcfe) during the second quarter of 2014, compared to 1,112 Mmcfe during the 2013 second quarter. Full production at the Company’s Lisewo-1 well helped offset declines at the Zaniemysl and Roszkow wells. In addition, production was unexpectedly curtailed at the Kromolice-1 well for 40 days during the quarter in order to effect some flow line repairs. The Company’s average daily production rate for the 2014 second quarter was 12.1 Mmcfe/day.
The Company expects production to begin at its Lisewo-2 well in the third quarter of this year, which could add approximately 1.7 Mmcf/d of net production.
Higher Oil and Gas Prices Produce Record First Half Oil and Gas Revenues
The Company reported a first half 2014 net loss of $5.5 million, or $(0.10) per share. This compares to a net loss of $22.1 million, or $(0.42) per share, for the first half of 2013. Included in the Company’s first half results were noncash (and intercompany) foreign exchange losses of $1.9 million and $12.6 million in 2014 and 2013, respectively. Without the foreign exchange losses, the Company would have recorded net losses of $3.6 million and $9.5 million for the six-month periods ended June 30, 2014 and 2013, respectively.
Oil and gas revenues for the 2014 first six months reached record levels. The Company recognized oil and gas revenues of $18.3 million for the first six months of 2014, compared to $17.6 million for the same period of 2013. Total revenues for the first six months of 2014 were $19.7 million, compared to $17.7 million in the first six months of 2013.
Total net oil and gas production of 2,332 Mmcfe during the first six months of 2014, was essentially unchanged compared to 2,372 Mmcfe during the same period last year. Natural gas production in Poland was 2,188 Mmcf during the first six months of 2014, compared to 2,228 Mmcf during the first half of 2013. But for the unexpected production curtailment at Kromolice-1, the Company would have posted record production during the first half of 2014.
Gas prices during the first half of 2014 averaged $7.49 per Mcf, compared to $7.08 per Mcf during the same period of 2013, an increase of 6%. Oil prices increased 4% over the year, averaging $80.27 per barrel in the first half of 2014, compared to $76.89 per barrel in the same period of 2013.
Working Capital Changes Impact Operating Cash; Noncash Charges Continue to Vary
Net cash provided by operating activities of $3.7 million during the first half of 2014 decreased from net cash provided by operating activities of $4.2 million during the 2013 first half. The primary driver of the year-to-year decrease was changes in working capital items.
The noncash foreign exchange losses of $1.9 million and $12.6 million for the first half of 2014 and 2013, respectively, are included in other income and expense. The losses come primarily from recognition of losses on U.S. dollar-denominated intercompany loans from FX Energy, Inc., to FX Poland, its wholly owned subsidiary. These are noncash losses only and could vary greatly depending upon future exchange-rate changes.
Subsequent Event: Stock Offering
Clay Newton, Vice President of Finance, noted: “Our successful offering of convertible preferred shares last month will add to our overall liquidity. The additional financial flexibility provided by this offering will prove helpful as we continue our exploration efforts in Poland. Specifically, the funds from this offering will allow us to continue our exploration efforts in the Edge concession, where we have a significant 3-D seismic acquisition program planned, along with two wells to start before the end of the year.”
Earnings Conference Call Today, Monday, August 11, 2014, at 4:30 PM Eastern (2:30 PM Mountain)
The Company will host a conference call and webcast today to discuss 2014 second quarter and first half results and update operational items at 4:30 p.m. Eastern Time. Conference call information is as follows: U.S. dial-in-number: 888-503-8171; International dial-in-number: 719-457-2633; Passcode: 2069509. 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 U.S. 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 Market under the symbol FXEN. Website www.fxenergy.com.
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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 with respect to exploration targets are certainly not guarantees of discovery or of the actual presence or recoverability of hydrocarbons, or of 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.
