Attached files
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| 8-K - FORM 8-K DATED MARCH 7, 2011 - FX ENERGY INC | form8kmarch72011.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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March 7, 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 2010 Revenues and Operating Income;
Looks to Continued Improvement in 2011
Salt Lake City, March 7, 2011 – FX Energy, Inc. (Nasdaq: FXEN) today announced financial results for its fourth quarter and full year of 2010. The Company reported a net loss for the full year 2010 of $0.8 million, or $0.02 per share, compared to a net loss in 2009 of $0.5 million, or $0.01 per share. Included in the Company’s yearly results were non-cash foreign exchange losses of $4.2 million in 2010 and non-cash foreign exchange gains of $7.1 million in 2009. The Company’s operating income rose from an operating loss of $7.0 million in 2009 to operating income of $4.6 million in 2010. Much of the improvement is due to the Company’s record revenues in 2010 of $25.0 million.
For the fourth quarter of 2010, the Company reported a net loss of $1.8 million, or $0.04 per share, compared to net income of $3.3 million, or $0.08 per share, during the same quarter of 2009. The 2010 fourth quarter results were negatively impacted by $1.4 million in non-cash foreign exchange charges, while positive non-cash foreign exchange items of $1.5 million contributed to the 2009 fourth quarter.
Record Oil and Gas Production Drives Full Year Revenues Higher
For the full year 2010, the Company reported record oil and gas production of 3,839 million cubic feet of gas equivalent (Mmcfe), or 10.5 million cubic feet of gas equivalent per day (Mmcfe/d). This compares to 2,266 Mmcfe (6.2 Mmcfe/d) during 2009, an increase of 69%. The Company’s fourth quarter 2010 oil and gas production was 931 Mmcfe (10.3 Mmcfe/d), a decrease of 14% from 1,080 Mcfe (12.0 Mmcfe/d) during the same quarter of 2009. The record 2010 production, in combination with slightly higher oil and gas prices, led to record oil and gas revenues of $22.9 million, compared to $12.8 million for 2009, an increase of 79%. Total revenues rose 71% from $14.7 million in 2009 to $25.0 million in 2010.
Clay Newton, FX’s Vice President Finance, remarked, “Our successful expansion efforts in Poland over the last several years have resulted in substantial new production. Our Polish exploration and production successes are now the primary drivers of our operating results. In particular, our Roszkow discovery and completion of our KSK production facilities have become major factors in our results.
The Company expects to see further production gains in 2011 as the KSK facilities come into full operating status. Its Sroda-4 well began producing into these new facilities at year-end. The Company expects its two Kromolice wells to begin producing into these new facilities in the second quarter of 2011. Once all three wells are on production, they should contribute approximately 7 Mmcfe/d to the Company’s net production. This could lead to another record year for oil and gas revenue.”
In Turn, Record Revenues Drive Operating Results Higher
The Company’s full year operating results improved significantly. Total revenues from all sources were up 71% from 2009 to 2010. The Company recorded oil and gas revenues of $22.9 million, compared to $12.8 million for 2009, an increase of 79%. Net operating income of $4.6 million for 2010 was a record for the Company, an improvement of $11.6 million from the operating loss of $7.0 million during 2009.
For the full year 2010, the Company’s total net production increased to 3,839 Mmcfe (10.5 Mmcfe/d) from 2,266 Mmcfe (6.2 Mmcfe/d) during 2009. The production increase was due entirely to having a full year of production from the Company’s Roszkow well. Higher oil and gas prices augmented the revenue increase. The Company’s average price for natural gas in Poland increased 8% from 2009 levels, averaging $5.39 per thousand cubic feet (Mcf). Polish gas tariffs were increased by a total of 14% through two price increases during the year. The first increase came in the third quarter, followed by a second increase in the fourth quarter. Oil prices also increased, with prices averaging $68 per barrel, up 31% from $52 per barrel in 2009.
Exploration expenses decreased 38% from 2009 levels. These expenses, which reflected the Company’s seismic acquisition, processing, and interpretation activities throughout its Poland acreage, dropped from $4.8 million in 2009 to $3.0 million in 2010, as the Company continued its practice of matching expenditures with available cash.
Included in non-cash charges for both years are foreign exchange gains and losses related to dollar-denominated intercompany loans, notes payable and unpaid interest held by FX Energy Poland. These are non-cash items primarily related to currency exchange rate fluctuations between reporting periods.
Fourth Quarter Production Declines Affect Revenues
As mentioned above, the Company recorded a net loss of $1.8 million (including the effects of $1.4 million of non-cash charges) during the fourth quarter of 2010. Total fourth quarter 2010 production of 931 Mmcfe (10.5 Mmcfe/d) was 14% lower than the 1,080 (12.0 Mmcfe/d) Mmcfe in the fourth quarter of 2009. Oil and gas revenues were $6.1 million, 6% lower than the $6.5 million recorded in the fourth quarter of 2009.
The production and revenue decreases for the quarter were due in large part to production declines implemented at the Company’s two primary wells in Poland by the operator of the wells, which took effect on October 1, 2010. Daily production rates at both wells were reduced by 7%. In addition, the Company’s Kleka well stopped producing during early 2010, which added to the fourth quarter decline. An increase in Polish natural gas prices offset some of the production declines. The average gas price in Poland during the fourth quarter of 2010 was $6.01 per Mcf compared to $5.53 per Mcf during the fourth quarter of 2009. Oil prices also increased, resulting in 2% higher oil revenues from the Company’s US oil production during the fourth quarter 2010.
Cash Flow Helps Drive Balance Sheet Improvements
Cash flow from operating activities climbed to $7.2 million during 2010 from cash used in operating activities during 2009 of $5.8 million, a yearly improvement of $13.0 million. This improved cash flow was amplified with a successful registered-direct offering of 1.5 million shares of common stock in December. At December 31, 2010, the Company’s cash balance was approximately $19.7 million. Working capital was $18.2 million at December 31, 2010 versus $3.5 million at December 31, 2009. Long-term debt was $35.0 million at the end of 2010.
Earnings Conference Call Today, Monday, March 7, 2011 at 4:30 PM. Eastern (2:30 PM. Mountain)
The Company will host a conference call and webcast today to discuss 2010 full year and fourth quarter results at 4:30 p.m. Eastern Time. The call will also include a discussion of the Company’s current operations. Conference call information is as follows: Dial-In-Number: 866-293-8972; International: 913-312-6679; Passcode: 8212782. Request: FX Energy, Inc. Conference Call.
2
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 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.
______________________________
FORWARD-LOOKING STATEMENTS
This press release and the related earnings conference call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance. 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, including risks and uncertainties as described in the Company’s public filings with the SEC. 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. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law.
3
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FX ENERGY, INC., AND SUBSIDIARIES
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Consolidated Balance Sheets
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As of December 31, 2010 and 2009
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(in thousands)
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2010
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2009
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||||
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ASSETS
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|||||
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Current assets:
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|||||
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Cash and cash equivalents
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$
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19,740
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$
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4,225
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Receivables:
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|||||
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Accrued oil and gas sales
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2,617
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2,875
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Joint interest and other receivables
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2,013
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918
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VAT receivable
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392
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--
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Inventory
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242
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232
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Other current assets
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293
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394
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Total current assets
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25,297
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8,644
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Property and equipment, at cost:
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|||||
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Oil and gas properties (successful efforts method):
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|||||
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Proved
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38,528
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32,700
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Unproved
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3,320
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3,403
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Other property and equipment
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8,853
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7,654
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Gross property and equipment
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50,701
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43,757
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Less accumulated depreciation, depletion and amortization
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(12,327)
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(11,466)
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Net property and equipment
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38,374
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32,291
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Other assets:
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|||||
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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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2,527
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729
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Total other assets
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2,933
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1,135
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Total assets
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$
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66,604
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$
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42,070
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-Continued-
4
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FX ENERGY, INC., AND SUBSIDIARIES
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Consolidated Balance Sheets
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As of December 31, 2010 and 2009
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(in thousands, except share data)
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-Continued-
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2010
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2009
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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|||||
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Current liabilities:
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|||||
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Accounts payable
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$
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5,742
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$
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3,569
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VAT payable
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--
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575
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Accrued liabilities
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1,343
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1,048
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Total current liabilities
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7,085
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5,192
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Long-term liabilities:
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Notes payable
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35,000
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25,000
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Asset retirement obligation
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682
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1,133
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Total long-term liabilities
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35,682
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26,133
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Total liabilities
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42,767
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31,325
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Commitments and Contingencies (Note 6)
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Stockholders’ equity:
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Preferred stock, $0.001 par value, 5,000,000 shares authorized as of
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December 31, 2010 and 2009; no shares outstanding
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--
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--
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Common stock, $0.001 par value, 100,000,000 shares authorized as of
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December 31, 2010 and 2009; 45,284,527 and 43,037,540 shares issued
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and outstanding as of December 31, 2010 and 2009, respectively
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45
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43
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Additional paid-in capital
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171,167
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160,594
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Cumulative translation adjustment
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14,013
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10,738
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Accumulated deficit
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(161,388)
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(160,630)
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Total stockholders’ equity
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23,837
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10,745
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Total liabilities and stockholders’ equity
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$
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66,604
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$
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42,070
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5
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FX ENERGY, INC., AND SUBSIDIARIES
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Consolidated Statements of Operations
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For the years ended December 31, 2010, 2009, and 2008
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(in thousands, except per share amounts)
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2010
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2009
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2008
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||||||
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Revenues:
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||||||||
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Oil and gas sales
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$
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22,914
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$
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12,772
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$
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13,494
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Oilfield services
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2,099
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1,892
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4,347
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|||||
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Total revenues
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25,013
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14,664
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17,841
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|||||
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Operating costs and expenses:
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||||||||
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Lease operating expenses
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3,473
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3,478
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3,441
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|||||
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Exploration costs
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3,038
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4,829
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15,389
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|||||
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Impairment of oil and gas properties
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564
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1,864
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14,746
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|||||
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Asset retirement obligation gain
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(264)
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(529)
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--
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|||||
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Oilfield services costs
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1,550
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1,412
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2,751
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|||||
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Depreciation, depletion and amortization (DD&A)
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2,626
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1,602
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1,720
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|||||
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Accretion expense
|
92
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41
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84
|
|||||
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Stock compensation
|
1,379
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1,693
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2,367
|
|||||
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Bad debt expense
|
--
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--
|
460
|
|||||
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General and administrative costs (G&A)
|
7,973
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7,257
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7,030
|
|||||
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Total operating costs and expenses
|
20,431
|
21,647
|
47,988
|
|||||
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Operating income (loss)
|
4,582
|
(6,983)
|
(30,147)
|
|||||
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Other income (expense):
|
||||||||
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Interest expense
|
(1,936)
|
(654)
|
(672)
|
|||||
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Interest and other income
|
829
|
54
|
394
|
|||||
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Foreign exchange gain (loss)
|
(4,233)
|
7,053
|
(24,279)
|
|||||
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Total other income (expense)
|
(5,340)
|
6,453
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(24,557)
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|||||
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Net loss
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$
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(758)
|
$
|
(530)
|
$
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(54,704)
|
||
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Basic and diluted net loss per common share
|
$
|
(0.02)
|
$
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(0.01)
|
$
|
(1.35)
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||
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Basic and diluted weighted average number
|
||||||||
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of shares outstanding
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43,387
|
42,529
|
40,420
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|||||
6
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FX ENERGY, INC., AND SUBSIDIARIES
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Consolidated Statements of Cash Flows
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For the years ended December 31, 2010, 2009, and 2008
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(in thousands)
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| 2010 | 2009 | 2008 | ||||||
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Cash flows from operating activities:
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||||||||
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Net loss
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$
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(758)
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$
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(530)
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$
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(54,704)
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||
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Adjustments to reconcile net loss to net cash used in
|
||||||||
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operating activities:
|
||||||||
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Depreciation, depletion and amortization
|
2,626
|
1,602
|
1,720
|
|||||
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Impairment of oil and gas properties
|
564
|
1,864
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14,746
|
|||||
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Accretion expense
|
92
|
41
|
84
|
|||||
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(Gain) loss on property dispositions
|
--
|
--
|
(5)
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|||||
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Stock compensation
|
1,379
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1,693
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2,367
|
|||||
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Foreign exchange (gains) losses
|
4,238
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(8,296)
|
22,306
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|||||
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Common stock issued for services (G&A)
|
636
|
694
|
498
|
|||||
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Asset retirement obligation gain
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(264)
|
(529)
|
--
|
|||||
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Loan fee amortization
|
971
|
242
|
210
|
|||||
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Increase (decrease) from changes in working capital items:
|
||||||||
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Receivables
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(1,809)
|
1,682
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(3,056)
|
|||||
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Inventory
|
(10)
|
(21)
|
(33)
|
|||||
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Other current assets
|
101
|
58
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(85)
|
|||||
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Other assets
|
(143)
|
(128)
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(136)
|
|||||
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Accounts payable and accrued liabilities
|
(289)
|
(4,025)
|
1,840
|
|||||
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Asset retirement obligations settled
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(85)
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(176)
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--
|
|||||
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Net cash provided by (used in) operating activities
|
7,249
|
(5,829)
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(14,248)
|
|||||
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Cash flows from investing activities:
|
||||||||
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Additions to oil and gas properties
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(6,475)
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(7,666)
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(21,808)
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|||||
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Additions to other property and equipment
|
(1,339)
|
(983)
|
(1,077)
|
|||||
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Additions to marketable securities
|
--
|
(11)
|
(186)
|
|||||
|
Proceeds from maturities of marketable securities
|
--
|
4,661
|
11,284
|
|||||
|
Proceeds from sale of assets
|
--
|
--
|
15
|
|||||
|
Net cash used in investing activities
|
(7,814)
|
(3,999)
|
(11,772)
|
|||||
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Cash flows from financing activities:
|
||||||||
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Proceeds from issuance of common stock, net of offering costs
|
8,403
|
--
|
--
|
|||||
|
Proceeds from notes payable, net of deferred loan fees
|
32,532
|
--
|
25,000
|
|||||
|
Payments of notes payable
|
(25,000)
|
--
|
--
|
|||||
|
Proceeds from loan related to auction-rate securities
|
--
|
--
|
3,354
|
|||||
|
Payments on loan related to auction-rate securities
|
--
|
(2,808)
|
(546)
|
|||||
|
Proceeds from exercise of stock options and warrants
|
157
|
132
|
12,313
|
|||||
|
Net cash provided by (used in) financing activities
|
16,092
|
(2,676)
|
40,121
|
|||||
|
Effect of exchange rate changes on cash
|
(12)
|
141
|
(1,775)
|
|||||
|
Net increase (decrease) in cash
|
15,515
|
(12,363)
|
12,326
|
|||||
|
Cash and cash equivalents at beginning of year
|
4,225
|
16,588
|
4,262
|
|||||
|
Cash and cash equivalents at end of year
|
$
|
19,740
|
$
|
4,225
|
$
|
16,588
|
||
7