FX Energy, Inc. has announced financial results for its first quarter ended March 31, 2009. The Company reported net earnings of $(24.4) million, or $(0.58) per share for the first quarter of 2009. Excluding non-cash foreign currency exchange losses of $(20.4) million, the Company's first quarter loss would have been $(4.0) million, or $(0.09) per share, approximately equal to the $(4.3) million, or $(0.11) per share reported in the first quarter of 2008.
The Company's total net production decreased from 419 Mmcfe during the first quarter of 2008 to 378 Mmcfe during the 2009 quarter. The production decline is due almost entirely to the Company's Wilga well in eastern Poland, where production is projected to continue declining throughout the year. However, production from the Company's largest discovery to date, the Roszkow well, is planned to start later this year, which is expected to put daily production at year-end 2009 well ahead of 2007 and 2008 year-end production levels.
Lower oil and gas revenues contributed to the loss, declining from $3.3 million during the 2008 first quarter to $1.8 million during the 2009 first quarter. Oil prices during the first quarter of 2009 averaged $33.94 per barrel, compared to $86.10 per barrel during the same quarter of 2008, a decrease of 61%. Gas prices in Poland were higher in the 2009 first quarter than in the same quarter of 2008, but the weaker Polish zloty resulted in a decrease in average Polish gas prices when converted to U.S. dollars. The average exchange rate during the first quarter of 2008 was 2.39 zlotys per U.S. dollar. The average exchange rate during the first quarter of 2009 dropped to 3.45 zlotys per U.S. dollar, a change of 45%.
"Despite the fact that our gas prices in Polish zlotys were actually 25% higher this year compared to last year, the weaker zloty resulted in a 25% decrease in U.S. reported average gas prices for the quarter," said David N. Pierce, CEO. "However, the situation is reversed for our drilling, operating and exploration costs. Exchange rates may continue to be volatile, and in fact the zloty is stronger now than it was at the end of the first quarter."
The non-cash foreign exchange charge of $20.4 million for the first quarter of 2009 is included in other income and expense. The charge comes primarily from recognition of gains and losses on intercompany loans from FX Energy, Inc., to FX Poland, our wholly-owned subsidiary. These are non-cash losses only, and could vary greatly depending upon future exchange rate changes.
The Company reported negative U.S. dollar denominated earnings before interest, taxes, depreciation, amortization, exploration expense, and other non-cash charges (EBITDAX)(1). EBITDAX during the first quarter of 2009 was $(0.7) million, compared to $1.2 million in the first quarter of 2008. At March 31, 2009, the Company's cash and investments were $9.1 million.