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| 8-K - FORM 8-K DATED MARCH 14, 20113 - FX ENERGY INC | form8kmarch1413.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 14, 2013
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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 2012 Production and Revenues;
Year End and Fourth-Quarter Results
Salt Lake City, March 14, 2013 – FX Energy, Inc. (Nasdaq: FXEN) today announced financial results for its fourth quarter and full year of 2012. The Company reported net income for the full year 2012 of $4.1 million, or $0.08 per share, compared to a net loss in 2011 of $28.5 million, or $0.57 per share. Included in the Company’s yearly results were non-cash foreign exchange gains of $16.3 million for 2012 and non-cash foreign exchange losses of $23.4 million for 2011. The Company’s operating loss increased to $10.0 million in 2012 from $3.1 million in 2011. Most of the increased loss is due to the Company’s increased seismic and dry hole costs in 2012.
For the fourth quarter of 2012, the Company reported a net loss of $0.4 million, or $0.01 per share, compared to a net loss of $10.1 million, or $0.23 per share, during the same quarter of 2011. Fourth quarter 2012 results were positively impacted by $4.3 million in non-cash foreign exchange gains, while non-cash foreign exchange losses reduced the 2011 fourth quarter by $7.6 million.
Record Oil and Gas Production Leads to Record Revenues
For the full year 2012, the Company reported record oil and gas production of 4,781 million cubic feet of gas equivalent (Mmcfe), or 13.1 million cubic feet of gas equivalent per day (Mmcfed). This compares to 4,399 Mmcfe (12.0 Mmcfed) during 2011, an increase of 9%. The Company’s fourth quarter 2012 oil and gas production was 1,270 Mmcfe (13.8 Mmcfed), an increase of 12% from 1,134 Mmcfe (12.3 Mmcfed) during the same quarter of 2011. The production increase was due entirely to production from the Company’s KSK wells in Poland.
Clay Newton, FX Energy’s Vice President Finance, remarked, “Our 2012 production, in combination with slightly higher natural gas prices in Poland, led to record oil and gas revenues of $34.5 million. This compares to $29.8 million for 2011, an increase of 16%. Total revenues rose 3% from $35.4 million in 2011 to $36.6 million in 2012.”
Mr. Newton continued, “This is our third consecutive year of reporting record oil and gas revenues, and total revenues. As we go into 2013, we could see this again, as we have two wells lined up to start producing this year.”
The Company’s 2012 average price for natural gas in Poland increased 10% from 2011 levels, averaging $6.81 per thousand cubic feet (Mcf). Polish gas tariffs were 21% higher during 2012, but currency fluctuations dampened the impact. Oil prices decreased, with prices averaging $76.87 per barrel for 2012, down 7% from the $83.02 average per barrel price for 2011.
Record Revenues Assist With Significant Increase in Capital Expenditures
The Company’s total capital expenditures, which include all exploration and development costs, reached $35.7 million in 2012, compared to $32.5 million in 2011. Not included in the 2012 figure is approximately $20 million expected to be incurred in early 2013 by the Company for wells and seismic which are now underway but were committed for in 2012.
The increased capital expenditures were funded by the Company’s higher revenues and cash balances. In the fourth quarter of 2011, the Company drew $40 million under its revolving bank credit facility in view of the unsettled conditions in Europe’s financial sector and to ensure the Company would have adequate funds available for its 2012 exploration and development spending.
Fourth Quarter Production Increases and Higher Prices Boost Revenues
Total fourth quarter 2012 production of 1,270 Mmcfe (13.8 Mmcfe/d) was 12% higher than the 1,134 (12.3 Mmcfe/d) Mmcfe in the fourth quarter of 2011. Oil and gas revenues were $9.6 million, 32% higher than the $7.3 million recorded in the fourth quarter of 2011.
The production and revenue increases for the quarter were due in part to increased production from the Company’s KSK wells. An increase in U.S. dollar-denominated Polish natural gas price augmented the production increases. The average gas price in Poland during the fourth quarter of 2012 was $7.31 per Mcf compared to $5.95 per Mcf during the fourth quarter of 2011. The increase in U.S. dollar-denominated prices was due primarily to higher natural gas tariffs in Poland.
Exploration Costs Impact Operating Cash
Cash flow used in operating activities increased from $0.1 million during 2011 to $1.2 million in 2012, an increase of $1.1 million. Exploration costs of $23.8 million during 2012 were more than $7.1 million higher than exploration costs incurred during 2011. In addition to the seismic and drilling costs that were expensed in 2012, the Company capitalized $16.6 million in successful exploration wells and production facilities costs during 2012. At December 31, 2012, the Company’s cash balance was approximately $34.0 million. Working capital was $30.4 million at December 31, 2012 versus $49.8 million at December 31, 2011. Debt drawn under the Company’s revolving credit facility was $40.0 million at the end of 2012, with $7.0 million classified as a short term obligation.
Non-cash Charges Continue to Vary
The non-cash foreign exchange gains of $16.3 million for 2012 and losses of $23.4 million for 2011 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 adjustments only, and could be either losses or gains in the future depending upon future exchange rates.
Earnings Conference Call Today, Thursday, March 14, 2013 at 4:30 PM. Eastern (2:30 PM. Mountain)
The Company will host a conference call and webcast today to discuss 2012 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: 888-417-8516; International: 719-325-2376; Passcode: 5337432. 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 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 Select 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.
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FX ENERGY, INC., AND SUBSIDIARIES
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Consolidated Balance Sheets
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As of December 31, 2012 and 2011
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(in thousands)
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2012
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2011
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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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33,990
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$
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50,859
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Receivables:
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|||||
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Accrued oil and gas sales
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3,447
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3,446
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|||
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Joint interest and other receivables
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7,733
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4,768
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Value-added tax receivable
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1,136
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389
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Inventory
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199
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196
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Other current assets
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614
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542
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Total current assets
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47,119
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60,200
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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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63,821
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49,388
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Unproved
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2,337
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3,482
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Other property and equipment
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10,717
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9,968
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Gross property and equipment
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76,875
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62,838
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Less accumulated depreciation, depletion, and amortization
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(19,786)
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(14,942)
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Net property and equipment
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57,089
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47,896
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Other assets:
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|||||
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Certificates of deposit
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382
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406
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Loan fees
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1,364
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1,722
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Total other assets
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1,746
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2,128
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Total assets
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$
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105,954
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$
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110,224
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-Continued-
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FX ENERGY, INC., AND SUBSIDIARIES
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Consolidated Balance Sheets
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As of December 31, 2012 and 2011
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(in thousands, except share data)
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-Continued-
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2012
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2011
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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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8,532
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$
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9,736
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Accrued liabilities
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1,192
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677
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Current portion of long-term debt
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7,000
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--
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Total current liabilities
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16,724
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10,413
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Long-term liabilities:
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Notes payable
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33,000
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40,000
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Asset retirement obligation
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1,431
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1,184
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Total long-term liabilities
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34,431
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41,184
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Total liabilities
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51,155
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51,597
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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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|||||
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December 31, 2012 and 2011; no shares outstanding
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--
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--
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Common stock, $0.001 par value, 100,000,000 shares authorized as of
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|||||
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December 31, 2012 and 2011; 53,246,620 and 52,787,350 shares issued
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and outstanding as of December 31, 2012 and 2011, respectively
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53
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53
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Additional paid-in capital
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222,513
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219,522
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Cumulative translation adjustment
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18,027
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28,964
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Accumulated deficit
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(185,794)
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(189,912)
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Total stockholders’ equity
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54,799
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58,627
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Total liabilities and stockholders’ equity
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$
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105,954
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$
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110,224
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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, 2012, 2011, and 2010
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(in thousands, except per share amounts)
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2012
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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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34,461
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$
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29,807
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$
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22,914
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Oilfield services
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2,137
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5,631
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2,099
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|||||
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Total revenues
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36,598
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35,438
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25,013
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Operating costs and expenses:
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Lease operating expenses
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3,631
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3,834
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3,473
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|||||
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Exploration costs
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23,795
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16,618
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3,038
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|||||
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Impairment of oil and gas properties
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2,562
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72
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564
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|||||
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Loss on sale of assets
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49
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--
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--
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|||||
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Asset retirement obligation gain
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--
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(52)
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(264)
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Oilfield services costs
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1,610
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4,458
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1,550
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Depreciation, depletion, and amortization (DD&A)
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4,239
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3,397
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2,626
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Accretion expense
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63
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68
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92
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|||||
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Stock compensation
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2,325
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1,744
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1,379
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General and administrative costs (G&A)
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8,369
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8,396
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7,973
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|||||
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Total operating costs and expenses
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46,643
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38,535
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20,431
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|||||
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Operating income (loss)
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(10,045)
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(3,097)
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4,582
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|||||
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Other income (expense):
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||||||||
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Interest expense
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(2,485)
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(2,167)
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(1,936)
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|||||
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Interest and other income
|
356
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188
|
829
|
|||||
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Foreign exchange gain (loss)
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16,292
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(23,448)
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(4,233)
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|||||
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Total other income (expense)
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14,163
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(25,427)
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(5,340)
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|||||
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Net income (loss)
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$
|
4,118
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$
|
(28,524)
|
$
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(758)
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Basic and diluted net income (loss)
per common share
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$
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0.08
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$
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(0.57)
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$
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(0.02)
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Basic and diluted weighted average number
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||||||||
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of shares outstanding
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52,274
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50,262
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43,387
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|||||
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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, 2012, 2011, and 2010
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(in thousands)
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| 2012 | 2011 | 2010 | ||||||
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Cash flows from operating activities:
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||||||||
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Net income (loss)
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$
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4,118
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$
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(28,524)
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$
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(758)
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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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||||||||
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Depreciation, depletion and amortization
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4,239
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3,397
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2,626
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|||||
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Impairment of oil and gas properties
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6,979
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72
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564
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|||||
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Accretion expense
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63
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68
|
92
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|||||
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Loss on property dispositions
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49
|
44
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--
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|||||
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Stock compensation
|
2,325
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1,744
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1,379
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|||||
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Foreign exchange (gains) losses
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(16,289)
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23,397
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4,238
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|||||
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Common stock issued for services (G&A)
|
666
|
777
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636
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|||||
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Asset retirement obligation revisions
|
408
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(52)
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(264)
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|||||
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Loan fee amortization
|
504
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554
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971
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|||||
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Increase (decrease) from changes in working capital items:
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||||||||
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Receivables
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(2,905)
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(5,241)
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(1,809)
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|||||
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Inventory
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(2)
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(3)
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(10)
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|||||
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Other current assets
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(50)
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(253)
|
101
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|||||
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Other assets
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25
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--
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(143)
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|||||
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Accounts payable and accrued liabilities
|
(1,320)
|
3,950
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(289)
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|||||
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Asset retirement obligations settled
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(43)
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(50)
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(85)
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|||||
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Net cash provided by (used in) operating activities
|
(1,233)
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(120)
|
7,249
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|||||
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Cash flows from investing activities:
|
||||||||
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Additions to oil and gas properties
|
(15,836)
|
(17,300)
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(6,475)
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|||||
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Additions to other property and equipment
|
(735)
|
(1,221)
|
(1,339)
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|||||
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Proceeds from sale of assets
|
221
|
35
|
--
|
|||||
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Net cash used in investing activities
|
(16,350)
|
(18,486)
|
(7,814)
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|||||
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Cash flows from financing activities:
|
||||||||
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Proceeds from issuance of common stock, net of offering costs
|
--
|
45,041
|
8,403
|
|||||
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Proceeds from notes payable, net of deferred loan fees
|
--
|
40,000
|
32,532
|
|||||
|
Payments of notes payable
|
--
|
(35,000)
|
(25,000)
|
|||||
|
Proceeds from exercise of stock options and warrants
|
--
|
801
|
157
|
|||||
|
Net cash provided by financing activities
|
--
|
50,842
|
16,092
|
|||||
|
Effect of exchange rate changes on cash
|
714
|
(1,117)
|
(12)
|
|||||
|
Net increase (decrease) in cash
|
(16,869)
|
31,119
|
15,515
|
|||||
|
Cash and cash equivalents at beginning of year
|
50,859
|
19,740
|
4,225
|
|||||
|
Cash and cash equivalents at end of year
|
$
|
33,990
|
$
|
50,859
|
$
|
19,740
|
||