FX Energy, Inc. (NASDAQ: FXEN) today announced financial results for its first quarter ended March 31, 2010. The Company reported record first quarter net earnings of $0.9 million, or $0.02 per share. This compares to a net loss of $(24.4) million, or $(0.58) per share for the first quarter of 2009.
Increased Production and Prices Drive Revenues Higher
Record first quarter production was the largest contributor to the Company's much improved results. Total net oil and gas production was 1,014 million cubic feet equivalent (Mmcfe) during the first quarter of 2010, compared to 378 Mmcfe during the 2009 quarter. Total revenues more than tripled to $6.2 million during the first quarter of 2010 from $1.8 million during the same quarter of 2009. The production increase was due to natural gas production in Poland from the Company's Roszkow well, which began producing in September 2009.
Oil prices doubled over the year, averaging $68.02 per barrel in the first quarter of 2010, compared to $33.94 per barrel in the same quarter of 2009. Gas prices during the first quarter of 2010 averaged $5.39 per Mcf, compared to $4.32 per Mcf during the same quarter of 2009, an increase of 25%. Zloty denominated gas prices were slightly lower in the 2010 first quarter than in the same quarter of 2009, but the stronger Polish zloty resulted in increased U.S. dollar prices.
Clay Newton, FX's Vice President Finance, remarked, "These first quarter records for production, revenues, and cash flow are the direct result of our decision to pursue the hydrocarbon potential in Poland. We also expect to see a further boost in production, revenues and cash flow near year-end as we start production from other wells already drilled in Poland. For the future, we expect to stay focused on our opportunities in Poland."
Cash Flow and EBITDAX Set First Quarter Records
Net cash provided from operating activities of $2.5 million during the 2010 first quarter increased $9.1 million from the $(6.6) million of cash used in operating activities during the first quarter of 2009. The Company also reported record first quarter earnings before interest, taxes, depreciation, amortization, exploration expense, and other non-cash charges (EBITDAX)(1). EBITDAX during the first quarter of 2010 was $3.6 million, compared to $(0.7) million in the first quarter of 2009. At March 31, 2010, the Company's cash and investments were $6.0 million, with working capital of $6.6 million.
Non-cash Charges Continue to Vary
The non-cash foreign exchange charges of $1.0 million and $20.4 million for the first quarters of 2010 and 2009, respectively, are included in other income and expense. The charges come primarily from recognition of gains and losses on intercompany loans from FX Energy, Inc., to FX Poland, its wholly-owned subsidiary. These are non-cash losses only, and could vary greatly depending upon future exchange rate changes.
Earnings Conference Call Tomorrow, Tuesday, May 11, 2010 at 4:30 P.M. Eastern (2:30 P.M. Mountain)
The Company will host a conference call and webcast tomorrow to discuss 2010 first quarter results and update operational items at 4:30 p.m. Eastern Time. Conference call information is as follows: US dial-in-number: 888-211-9963; International dial-in-number: 913-312-1408; Passcode: 5314112. 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
(1) Explanation and Reconciliation of Non-GAAP Financial Measures
Earnings before interest, taxes, depreciation, amortization, exploration expense, and other non-cash charges (EBITDAX) is a non-GAAP measure presented because of its acceptance as an indicator of an oil and gas exploration and production Company's ability to internally fund exploration and development activities and to service debt. EBITDAX should not be considered in isolation or as a substitute for operating income prepared in accordance with generally accepted accounting principles. The table below reconciles EBITDAX with income from continuing operations as derived from the Company's financial information.
EBITDAX: Three Months Ended March 31, March 31, 2010 2009 ----------- ---------- Net income (loss) $ 929 $ (24,404) Foreign exchange loss 1,006 20,450 Exploration expense 363 2,120 Depletion, depreciation and amortization 573 374 Interest expense, net 151 135 Other non-cash items 615 616 ----------- ---------- EBITDAX $ 3,637 $ (709) =========== ==========
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) March 31, December 31, 2010 2009 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 6,029 $ 4,225 Receivables: Accrued oil and gas sales 2,618 2,875 Other receivables 81 918 Inventory 240 232 Other current assets 324 394 ------------ ------------ Total current assets 9,292 8,644 ------------ ------------ Property and equipment, at cost: Oil and gas properties (successful efforts method): Proved 32,659 32,700 Unproved 3,416 3,403 Other property and equipment 7,824 7,654 ------------ ------------ Gross property and equipment 43,899 43,757 Less accumulated depreciation, depletion and amortization (12,019) (11,466) ------------ ------------ Net property and equipment 31,880 32,291 ------------ ------------ Other assets: Certificates of deposit 406 406 Loan fees 668 729 ------------ ------------ Total other assets 1,074 1,135 ------------ ------------ Total assets $ 42,246 $ 42,070 ============ ============ -Continued- FX ENERGY, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (in thousands, except share data) -Continued- March 31, December 31, 2010 2009 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,099 $ 3,569 VAT payable 985 575 Accrued liabilities 594 1,048 ------------ ------------ Total current liabilities 2,678 5,192 ------------ ------------ Long-term liabilities: Notes payable 25,000 25,000 Asset retirement obligation 1,149 1,133 ------------ ------------ Total long-term liabilities 26,149 26,133 ------------ ------------ Total liabilities 28,827 31,325 ------------ ------------ Stockholders' equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized as of March 31, 2010, and December 31, 2009; no shares outstanding -- -- Common stock, $0.001 par value, 100,000,000 shares authorized as of March 31, 2010, and December 31, 2009; 43,260,517 and 43,037,540 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively 43 43 Additional paid-in capital 161,581 160,594 Cumulative translation adjustment 11,496 10,738 Accumulated deficit (159,701) (160,630) ------------ ------------ Total stockholders' equity 13,419 10,745 ------------ ------------ Total liabilities and stockholders' equity $ 42,246 $ 42,070 ============ ============ FX ENERGY, INC. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (in thousands, except per share amounts) For the Three Months Ended March 31, -------------------------- 2010 2009 ------------ ------------ Revenues: Oil and gas sales $ 6,029 $ 1,762 Oilfield services 143 20 ------------ ------------ Total revenues 6,172 1,782 ------------ ------------ Operating costs and expenses: Lease operating expenses 881 747 Exploration costs 363 2,120 Oilfield services costs 169 181 Depreciation, depletion and amortization 573 374 Accretion expense 20 8 Stock compensation 352 439 General and administrative costs 1,728 1,732 ------------ ------------ Total operating costs and expenses 4,086 5,601 ------------ ------------ Operating income (loss) 2,086 (3,819) ------------ ------------ Other income (expense): Interest expense, net and other expense (151) (135) Foreign exchange loss (1,006) (20,450) ------------ ------------ Total other expense (1,157) (20,585) ------------ ------------ Net income (loss) $ 929 $ (24,404) ============ ============ Other comprehensive income (loss): Foreign currency translation adjustment 758 15,361 ------------ ------------ Comprehensive income (loss) $ 1,687 $ (9,043) ============ ============ Basic and diluted net income (loss) per common share $ 0.02 $ (0.58) ============ ============ Basic and diluted weighted average number of shares Outstanding 43,214 42,396 ============ ============ FX ENERGY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (in thousands) For the Three Months Ended March 31, -------------------------- 2010 2009 ------------ ------------ Cash flows from operating activities: Net income (loss) $ 929 $ (24,404) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 573 374 Accretion expense 20 8 Amortization of bank fees 61 46 Stock compensation 352 439 Foreign exchange losses 1,004 19,025 Common stock issued for services 635 709 Increase (decrease) from changes in working capital items: Receivables 1,478 1,881 Inventory (8) (5) Other current assets 70 41 Other assets -- (61) Accounts payable and accrued liabilities (2,626) (4,659) ------------ ------------ Net cash provided by (used in) operating activities 2,488 (6,606) ------------ ------------ Cash flows from investing activities: Additions to oil and gas properties (487) (2,472) Additions to other property and equipment (171) (433) Additions to marketable securities -- (10) Proceeds from maturities of marketable securities -- 3,798 ------------ ------------ Net cash (used in) provided by investing activities (658) 883 ------------ ------------ Cash flows from financing activities: Payments on loan related to auction rate securities -- (2,408) Proceeds from exercise of stock options and warrants -- -- ------------ ------------ Net cash used in financing activities -- (2,408) ------------ ------------ Effect of exchange rate changes on cash (26) (151) ------------ ------------ Net increase (decrease) in cash 1,804 (8,282) Cash and cash equivalents at beginning of year 4,225 16,588 ------------ ------------ Cash and cash equivalents at end of period $ 6,029 $ 8,306 ============ ============
SCOTT J. DUNCAN FX Energy, Inc. 3006 Highland Drive, Suite 206 Salt Lake City, Utah 84106 (801) 486-5555 Fax (801) 486-5575 www.fxenergy.com