FX Optimistic on Polish Prospects
FX Energy reported record third quarter oil and gas production, due primarily to new natural gas production in Poland from the Company’s Sroda-4, Kromolice-1 and Kromolice-2 wells.
Natural gas production in Poland was 1,017 million cubic feet (Mmcf) during the third quarter of 2011, compared to 794 Mmcf during the same period of 2010.
The company benefited from a 21% percent increase Polish gas prices from the previous period, with the latest increase of 12% coming into effect on August 1st. TFX Energy commented that it was likely that prices would continue to trend higher.
Since 2000, FX Energy's 49% owned Fences concession has seen the drilling of 11 wells, eight of which have been successful providing estimated reserves of 225 Bcf gross. Fences presently produce 27 million cubic feet equivalent, representing 6 percent of total Polish output.
FX highlighted significant potential from its upcoming drilling activity, including in the area surrounding around the Lisewo discovery well, which it hopes to bring on stream mid-2013.
CEO David Pierce said that PGNiG plans to hydraulically fracture three zones at the Plawce-2 tight gas well prior to year-end. Plawce-2, which is within Fences concession, is at total depth of 4,200 meters, with approximately 480 meters of Rotliegend sandstone.
Pierce referred to the Kutno concession area as being "high risk" but having "enormous potential." The well casing for the Kutno 2 well was set before the before the onset of the winter and activity is expected to re-commence in Q2 of 2012. Kutno-2 well is planned to test a large (approximately 35,000 acres or 140 square kilometers) 2-D defined Rotliegend structure at a depth of approximately 6,500 meters (21,000 feet). FX Energy is the operator and holds 50% of the Kutno concession; PGNiG holds 50% interest.
Pierce said that political, regulatory and landholder issues had led to delays, including at the Winna Gora well, which FX hope to move into production in mid-2012. Irrespective of delays, Pierce said that Poland was "the place to be," in Europe.
The FX Energy executive said that the company was moving cautiously in dealing with well completions, given issues experienced by other operators in Poland recently.
FX and its partners incurred expenditures of $40 million on development activities on Polish assets in the first nine months of the year.