FX Energy Inc. (Nasdaq: FXEN) has announced results for its first quarter ended March 31, 2013.
Polish Operations Drive Higher Production and Revenues
Total revenues for the first quarter of 2013 were $9.5 million. This was up 11% over the $8.6 million of the 2012 first quarter. Gains in both production and natural gas prices contributed to the increase.
Total net oil and gas production was 1,261 million cubic feet equivalent (Mmcfe) during the first quarter of 2013, a daily average of 14.0 Mmcfe/d. First quarter 2012 production was 1,205 Mmcfe, a daily average of 13.2 Mmcfe/d. Production from the Kromolice-1, Sroda-4, and Kromolice-2, or KSK, wells increased by 256,000 thousand cubic feet of natural gas over 2012 first quarter levels, as first quarter 2012 production at KSK was constrained due to a pipeline bottleneck. In addition, new production at the Winna Gora well combined with the KSK increase to offset production declines at the Zaniemysl and Roszkow wells.
Natural gas prices during the first quarter of 2013 were 19% higher than during the same period of 2012. Natural gas production increased by 6% in the 2013 first quarter. Together, these increases resulted in a 26% increase in natural gas revenues from quarter to quarter. 2013 first quarter natural gas revenues were $8.5 million, compared to $6.8 million during the same quarter of 2012, an increase of $1.7 million. Unlike the U.S., demand for natural gas exceeds domestic Polish supplies and Poland imports most of the natural gas it uses. Thus, natural gas pricing is driven by demand that exceeds domestic supply. FX Energy has consistently cited the different natural gas pricing dynamics of Poland versus those in the U.S. as one of the reasons for the Company's focus on Poland.
The average price received in Poland for the first quarter of 2013 was $7.18 per Mcf, compared to $6.03 per Mcf for the first quarter of 2012. Zloty-denominated gas prices were 13.1% higher in the 2013 first quarter than in the same quarter of 2012. In addition, period-to-period strengthening in the Polish zloty produced a higher U.S. dollar-denominated average price in the first quarter of 2013.
Lower oil prices and production dampened somewhat the effect of higher gas prices and production. Oil revenues of $900,000 in the first quarter of 2013 were 22% lower than $1.2 million during the first quarter of 2012. Oil prices averaged $76.46 per barrel in the first quarter of 2013, compared to $84.97 per barrel in the same quarter of 2012. Currently all of the Company's oil production is in the U.S. This oil is a relatively heavy grade of crude and sells at a discount to the standard WTI price.
Clay Newton, FX's vice president finance, remarked: "The company expects production to begin at its Lisewo-1 and Komorze-3K wells during the second half of 2013. Just as production from new wells and facilities in Poland has boosted recent results, we expect Lisewo-1 and Komorze-3K will provide similar benefits in the second half of this year."
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