OilVoice - FX Energy Reports Higher Year-End 2009 Reserves and Production

FX Energy Reports Higher Year-End 2009 Reserves and Production

Saturday, February 20, 2010

FX Energy, Inc. has announced its proved oil and gas reserves at year-end 2009 rose to 50.4 billion cubic feet equivalent ("Bcfe"). This figure is 4.5 Bcfe, or 10%, above the year-end 2008 figure of 45.9 Bcfe. Over the last six years the Company has enjoyed a 30% compound annual growth rate in proved oil and gas reserve volumes.

296 Percent Reserve Replacement Builds Net Value
Total extensions, discoveries and revisions for 2009 were 6.8 Bcfe. This represents reserve replacement of 296% compared to the 2.3 Bcfe of total production for the year. Exploration success helped drive significantly higher net values for total oil and gas reserves. The pre-tax net present value (discounted at 10 percent) of the Company's proved reserves rose to $169 million. This is $32 million, or 23%, higher than the 2008 year-end figure of $137 million. This is also the sixth consecutive annual increase in the Company's oil and gas reserves value.

The increases were the result of new reserves from the Company's Kromolice-2 discovery and the Grabowka development project, both in Poland, and the positive impact from increased oil and gas prices. Prices for the Company's domestic oil reserves increased from $24.58 per barrel in 2008 to $47.67 in 2009. Polish gas prices increased from $5.29 per mcf in 2008 to $5.95 in 2009.

Andy Pierce, Vice President Operations, remarked:
"We are especially pleased with these reserve results. This year, many US producers have had challenges replacing and growing reserves with US natural gas prices being so unpredictable. In contrast, gas prices in Poland were relatively strong and stable, and our exploration efforts there have continued to bear fruit. Our efforts over the last several years resulted in new gas field discoveries at Sroda, Roszkow and Kromolice in our Polish Fences concession, which have substantially boosted our reserves and our cash flow base."

Plans for 2010
Mr. Pierce continued, "Consequently, we will continue to devote the bulk of our exploration resources to Poland. Our current plans for 2010 include three new exploratory wells in the Fences concession and a new re-entry project in the Zakowo field in Poland. Any of these four projects could materially boost our reserves. We also plan to bring on new production from four of our prior discoveries. Three of these could be completed as early as year-end, which would add significantly to 2011 production and cash flow."

Production
FX Energy has also reported production figures for the fourth quarter and full year 2009. Total oil and gas production for the fourth quarter of 2009 was 1.08 Bcfe (billion cubic feet equivalent), or 280 percent of the 0.39 Bcfe produced in the fourth quarter of 2008. Full year 2009 production was 2.26 Bcfe, or 136 percent of the 1.67 Bcfe total produced in 2008.

New Gas Production Drives Results
The production increase for the Company in the 2009 fourth quarter was primarily the result of the Roszkow well in Poland, which began producing in late September 2009. This well was drilled and completed in 2007. It encountered 34 meters (110 feet) of net pay in a Rotliegend sandstone reservoir. The Roszkow well has proved reserves of 51.5 Bcfe, of which FX Energy owns 49%.

Higher Production Rates Expected to Continue
“We believe the 2009 fourth quarter production increase represents a significant inflection point for us,” said David Pierce, president and CEO of FX Energy. “Production now is of a magnitude to make an important contribution to capital spending. Not only was the production increase dramatic, but these new higher levels should be relatively sustainable. Gas wells in the Fences area, like the Roszkow well, have historically sustained their initial production rates for several years. We think the Company’s current production rate of 11.5 MMcfed (million cubic feet equivalent per day) is a relatively sustainable rate. In addition, we anticipate putting three more wells in three other Polish gas fields on production near the end of this year, which should boost production even higher and for a longer period.”

“Moreover,” continued Pierce, “Roszkow and the production results we are reporting today represent a very strong endorsement of our focus on the Polish Permian Basin. Just as the North American Permian Basin has been very good to US producers, and the western European Permian has been good to North Sea producers, we believe that the eastern European Permian could hold multiple, long-term, high potential exploration targets for us. Our discoveries with the Roszkow well and our six other commercial discoveries to date in our Fences concession give us even more confidence in the eastern European Permian.”