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| 8-K - FORM 8-K DATED MAY 9, 2011 - FX ENERGY INC | form8kmay0911.htm |
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FOR IMMEDIATE RELEASE
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SCOTT J. DUNCAN
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FX Energy, Inc.
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May 9, 2011
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3006 Highland Drive, Suite 206
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Salt Lake City, Utah 84106
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(801) 486-5555 Fax (801) 486-5575
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www.fxenergy.com
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FX Energy Reports Record First Quarter
Production, Revenues and Cash Flow
Salt Lake City, May 9, 2011, – FX Energy, Inc. (NASDAQ: FXEN) today announced financial results for its first quarter ended March 31, 2011. The Company reported first quarter net earnings of $6.5 million, or $0.14 per share. This compares to net income of $0.9 million, or $0.02 per share, for the first quarter of 2010. Included in the Company’s quarterly results were non-cash foreign exchange gains of $6.8 million in 2011 and non-cash foreign exchange losses of $1.0 million in 2010.
Strong Balance Sheet Supports an Increased Capital Budget
Increasing revenues and cash flow have added to the Company’s balance sheet liquidity over recent months. More importantly, a registered direct offering of 6.9 million shares of common stock in early March 2011 netted proceeds of $45.2 million. As a result, the Company repaid all amounts outstanding under its $55 million credit facility. At March 31, 2011, the Company’s cash and investments were $29.6 million, with working capital of $27.7 million.
Clay Newton, FX’s Vice President Finance, remarked, “Our balance sheet is stronger than ever before. With almost $30 million in cash, no debt, existing credit capacity, and expected record production, revenues and cash flow, we expect 2011 to be an exciting year, both financially and operationally. We are on track to see the largest capital spending in our history. Our anticipated total capital expenditures for the year are in the $60 to $70 million range. Also, our capital structure is sufficiently robust that we could finance even larger capital expenditures should economic opportunities be available.”
Increased Production and Prices Drive Revenues Higher
Record first quarter production and higher product prices were the largest contributors to the Company’s results. Total net oil and gas production was 1,060 million cubic feet equivalent (Mmcfe) during the first quarter of 2011, compared to 1,014 Mmcfe during the 2010 quarter. Net gas production increased from 918 million cubic feet in 2010 to 975 million cubic feet in 2011. Total revenues increased to $7.1 million during the first quarter of 2011 from $6.2 million during the same quarter of 2010. The production increase was due to natural gas production in Poland from the Company’s Sroda-4 well, which began producing in December 2010.
Gas prices during the first quarter of 2011 averaged $6.12 per Mcf, compared to $5.39 per Mcf during the same quarter of 2010, an increase of 14%. Zloty denominated gas prices were higher in the 2011 first quarter than in the same quarter of 2010 due to two tariff increases during the second half of 2010. Exchange rates from quarter to quarter were essentially flat. Oil prices increased 20% over the year, averaging $81.69 per barrel in the first quarter of 2011, compared to $68.02 per barrel in the same quarter of 2010.
Production Gains Expected in Second Half
The Company expects production to begin at its two Kromolice wells in Poland during the second quarter of 2011. The two wells should produce at a gross rate of approximately 10.5 million cubic feet per day, or approximately 5.1 million cubic feet per day net to the Company. Once on line, this will increase the Company’s net production to approximately 17 million cubic feet equivalent per day.
Operating Cash Flow Sets First Quarter Record; Non-cash Charges Continue to Vary
Net cash provided from operating activities of $4.7 million during the 2011 quarter increased 89% from the $2.5 million of cash provided by operating activities during the first quarter of 2010. The 2011 increase takes into account exploration costs that were $2.5 million greater than those of 2010.
The non-cash foreign exchange gain of $6.8 million and the foreign exchange loss of $1.0 million for the first quarters of 2011 and 2010, respectively, are included in other income and expense. The gains and losses 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 non-cash gains and losses only, and could vary greatly depending upon future exchange rate changes.
Earnings Conference Call Today, Monday, May 9, 2011 at 4:30 PM. Eastern (2:30 PM. Mountain)
The Company will host a conference call and webcast today to discuss 2011 first quarter results and update operational items at 4:30 p.m. Eastern Time. Conference call information is as follows: US dial-in-number: 888-668-1645; International dial-in-number: 913-312-1463; Passcode: 3962262. 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 that 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 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.
FX ENERGY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(in thousands)
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March 31,
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December 31,
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||||
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2011
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2010
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ASSETS
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|||||
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Current assets:
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Cash and cash equivalents
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$
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29,581
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$
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19,740
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Receivables:
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|||||
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Accrued oil and gas sales
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3,052
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2,617
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Joint interest and other receivables
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211
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2,013
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VAT receivable
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--
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392
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Inventory
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240
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242
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Other current assets
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299
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293
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Total current assets
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33,383
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25,297
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Property and equipment, at cost:
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Oil and gas properties (successful efforts method):
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Proved
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43,029
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38,528
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Unproved
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3,488
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3,320
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Other property and equipment
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9,033
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8,853
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Gross property and equipment
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55,550
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50,701
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Less accumulated depreciation, depletion and amortization
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(13,201)
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(12,327)
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Net property and equipment
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42,349
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38,374
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Other assets:
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Certificates of deposit
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406
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406
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Loan fees
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2,506
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2,527
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Total other assets
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2,912
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2,933
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Total assets
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$
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78,644
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$
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66,604
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-Continued-
FX ENERGY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
-Continued-
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March 31,
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December 31,
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2011
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2010
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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4,692
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$
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5,742
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VAT payable
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117
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--
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Accrued liabilities
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864
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1,343
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Total current liabilities
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5,673
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7,085
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Long-term liabilities:
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Notes payable
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--
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35,000
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Asset retirement obligation
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712
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682
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Total long-term liabilities
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712
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35,682
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Total liabilities
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6,385
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42,767
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Stockholders’ equity:
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Preferred stock, $0.001 par value, 5,000,000 shares authorized
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as of March 31, 2011, and December 31, 2010; no shares
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outstanding
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--
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--
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Common stock, $0.001 par value, 100,000,000 shares authorized
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as of March 31, 2011, and December 31, 2010; 52,315,827
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and 45,284,527 shares issued and outstanding as of
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March 31, 2011, and December 31, 2010, respectively
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52
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45
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Additional paid-in capital
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217,524
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171,167
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Cumulative translation adjustment
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9,537
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14,013
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Accumulated deficit
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(154,854)
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(161,388)
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Total stockholders’ equity
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72,259
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23,837
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Total liabilities and stockholders’ equity
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$
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78,644
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$
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66,604
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FX ENERGY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except per share amounts)
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For the Three Months Ended
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March 31,
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2011
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2010
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Revenues:
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Oil and gas sales
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$
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7,122
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$
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6,029
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Oilfield services
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25
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143
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Total revenues
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7,147
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6,172
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Operating costs and expenses:
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Lease operating expenses
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770
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881
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Exploration costs
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2,877
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363
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Oilfield services costs
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141
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169
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Depreciation, depletion and amortization
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737
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573
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Accretion expense
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17
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20
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Stock compensation
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356
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352
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General and administrative costs
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1,961
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1,728
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Total operating costs and expenses
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6,859
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4,086
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Operating income
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288
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2,086
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Other income (expense):
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Interest expense
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(600)
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(157)
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Interest and other income
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53
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6
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Foreign exchange gain (loss)
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6,793
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(1,006)
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Total other income (expense)
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6,246
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(1,157)
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Net income
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$
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6,534
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$
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929
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Other comprehensive income:
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Foreign currency translation adjustment
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(4,476)
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758
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Comprehensive income
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$
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2,058
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$
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1,687
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Basic and diluted net income per common share
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$
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0.14
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$
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0.02
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Basic weighted average number of shares outstanding
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45,943 | 42,474 | |||
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Diluted weighted average number of shares outstanding
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46,751 | 43,215 | |||
FX ENERGY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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For the Three Months Ended
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|||||
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March 31,
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2011
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2010
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Cash flows from operating activities:
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Net income
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$
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6,534
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$
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929
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Adjustments to reconcile net income to net cash
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|||||
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provided by operating activities:
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|||||
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Depreciation, depletion and amortization
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737
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573
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Accretion expense
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17
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20
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Amortization of bank fees
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142
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61
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Stock compensation
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356
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352
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Foreign exchange (gains) losses
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(6,783)
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1,004
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Common stock issued for services
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706
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635
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Increase (decrease) from changes in working capital items:
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Receivables
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2,056
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1,478
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Inventory
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2
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(8)
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Other current assets
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(6)
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70
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|||
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Other assets
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--
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--
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Accounts payable and accrued liabilities
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936
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(2,626)
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Net cash provided by operating activities
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4,697
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2,488
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|||
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Cash flows from investing activities:
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|||||
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Additions to oil and gas properties
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(5,445)
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(487)
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Additions to other property and equipment
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(188)
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(171)
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Net cash used in investing activities
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(5,633)
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(658)
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Cash flows from financing activities:
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|||||
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Payments on credit facility
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(35,000)
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--
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Proceeds from common stock offering, net
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45,175
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--
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|||
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Proceeds from exercise of stock options and warrants
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128
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--
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|||
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Net cash provided by financing activities
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10,303
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--
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|||
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Effect of exchange rate changes on cash
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474
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(26)
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|||
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Net increase in cash
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9,841
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1,804
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|||
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Cash and cash equivalents at beginning of year
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19,740
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4,225
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|||
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Cash and cash equivalents at end of period
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$
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29,581
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$
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6,029
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