FX ENERGY, INC.
SALT LAKE CITY, UT--(Marketwired - Nov 10, 2014) - FX Energy, Inc. (
For the comparable 2013 quarter, the Company reported net income of $6.5 million, or $0.12 per share. Excluding a noncash, intracompany, foreign currency exchange gain of $11.5 million, the Company would have recorded a third quarter 2013 net loss of $5.0 million, or $0.10 per share.
Third Quarter Total Revenues Reach Record Levels; Higher Gas Prices and Higher Oilfield Services Revenues Lead the Way
Oil and gas revenues were $8.5 million during the third quarter of 2014, or 6% higher than the $8.0 million during the same quarter of 2013. Total revenues jumped 24% to $10.2 million for the 2014 third quarter, compared to $8.2 million for the same quarter in 2013.
Unlike still depressed U.S. natural gas prices, the price for the Company's natural gas, which is exclusively in Poland, remained strong. Specifically, gas prices during the third quarter of 2014 averaged $7.26 per thousand cubic feet, or Mcf, compared to $7.02 per Mcf during the same quarter of 2013. Prices for the Company's U.S. oil production decreased during the 2014 quarter. Oil prices decreased 11% over the year, averaging $78.18 per barrel in the third quarter of 2014, compared to $88.14 per barrel in the same quarter of 2013.
Total net oil and gas production increased 5% to 1,113 million cubic feet equivalent (Mmcfe) during the third quarter of 2014, compared to 1,062 Mmcfe during the 2013 quarter. New and full period production from the Company's Lisewo-1, Lisewo-2, Winna Gora, and Komorze-3K wells more than offset production declines at the Zaniemysl-3 and Roszkow wells. The Company's average daily production rate for the 2014 third quarter was 12.1 million cubic feet equivalent (Mmcfe) per day.
Clay Newton, Vice President of Finance, remarked: "We continue to enjoy the benefits of a strong natural gas market in Europe, where our realized prices are consistently much higher than in the United States. This comparative price advantage and its attendant strategic benefits are a primary reason that we remain focused on Poland. We continue to devote the bulk of our capital and technical expertise to expanding our operations in that country."
Nine-Month Revenues also Reach Record Levels
Oil and gas revenues for the 2014 first nine months reached record levels. Oil and gas revenues accelerated 4% to $26.8 million for the first nine months of 2014, compared to $25.7 million for the same period of 2013. Total revenues for the first nine months of 2014 rose an even greater 15% to $29.9 million, compared to $25.9 million in the first nine months of 2013.
The Company reported a net loss of $22.3 million, or $0.42 per share, for the first nine months of 2014. Excluding noncash, intracompany, foreign currency exchange losses of $15.4 million, the Company would have recorded a net loss attributable to common stockholders for the first nine months of 2014 of $7.0 million, or $0.13 per share. The Company reported a net loss of $15.6 million, or $0.30 per share, for the first nine months of 2013. Excluding noncash, intracompany, foreign currency exchange losses of $1.0 million, the Company would have recorded a net loss for the first nine months of 2013 of $14.6 million, or $0.28 per share.
Total production for both nine-month periods was 3.4 billion cubic feet equivalent. Daily production for both periods was 12.6 Mmcfe/d. Gas prices during the first nine months of 2014 averaged $7.41 per Mcf, compared to $7.06 per Mcf during the same period of 2013, an increase of 5%. Oil prices decreased 1% over the year, averaging $79.60 per barrel in the first nine months of 2014, compared to $80.75 per barrel in the same period of 2013.
Higher Revenues Improve Operating Cash; Noncash Charges Continue to Vary
Net cash provided by operating activities of $8.8 million during the first nine months of 2014 was more than triple the net cash provided by operating activities of $2.9 million during the 2013 period. The primary driver of the year-to-year increase was the Company's $4.0 million increase in revenues from period to period.
The noncash foreign exchange losses of $15.4 million and $1.0 million for the first nine months of 2014 and 2013, respectively, are included in other income and expense. The losses come primarily from recognition of losses on U.S. dollar-denominated, intracompany loans from FX Energy, Inc., to FX Poland, its wholly owned subsidiary. These are noncash losses only and could vary greatly depending upon future exchange-rate changes.
Improved Liquidity Going Forward
Following a successful preferred stock offering during the third quarter, the Company's cash and investments totaled approximately $27.5 million at the end of September 2014. In addition, working capital was approximately $28.7 million, and $15 million remains available under the Company's credit facility. This availability would be increased should the recent Tuchola and Karmin discoveries be included in the borrowing base.
The Company's first preferred stock dividend, approximately $385,000, was paid to preferred shareholders on October 31, 2014.
Earnings Conference Call Today, Monday, November 10, 2014, at 4:30 p.m. Eastern (2:30 p.m. Mountain)
The Company will host a conference call and webcast today to discuss 2014 third quarter and first nine-month results and update operational items at 4:30 p.m. Eastern Time. Conference call information is as follows: U.S. dial-in-number: 888-572-7025; International dial-in-number: 719-325-2484; Passcode: 3516139. 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 who 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 United States 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.
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) | |||||||||||
| September 30, | December 31, | ||||||||||
| 2014 | 2013 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 23,467 | $ | 11,153 | |||||||
| Marketable securities | 4,059 | -- | |||||||||
| Receivables: | |||||||||||
| Accrued oil and gas sales | 3,460 | 3,464 | |||||||||
| Joint interest and other receivables | 1,527 | 5,029 | |||||||||
| VAT receivable | -- | 1,847 | |||||||||
| Inventory | 99 | 100 | |||||||||
| Other current assets | 345 | 234 | |||||||||
| Total current assets | 32,957 | 21,827 | |||||||||
| Property and equipment, at cost: | |||||||||||
| Oil and gas properties (successful-efforts method): | |||||||||||
| Proved | 82,996 | 85,244 | |||||||||
| Unproved | 2,327 | 2,404 | |||||||||
| Other property and equipment | 12,590 | 11,857 | |||||||||
| Gross property and equipment | 97,913 | 99,505 | |||||||||
| Less accumulated depreciation, depletion, and amortization | (26,082 | ) | (23,369 | ) | |||||||
| Net property and equipment | 71,831 | 76,136 | |||||||||
| Other assets: | |||||||||||
| Certificates of deposit | 406 | 406 | |||||||||
| Loan fees | 1,769 | 2,323 | |||||||||
| Total other assets | 2,175 | 2,729 | |||||||||
| Total assets | $ | 106,963 | $ | 100,692 | |||||||
| -Continued- |
| FX ENERGY, INC. AND SUBSIDIARIES | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| (in thousands, except share data) | |||||||||||
| -Continued- | |||||||||||
| September 30, | December 31, | ||||||||||
| 2014 | 2013 | ||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 2,713 | $ | 9,694 | |||||||
| VAT payable | 502 | -- | |||||||||
| Accrued dividends | 385 | -- | |||||||||
| Accrued liabilities | 640 | 833 | |||||||||
| Total current liabilities | 4,240 | 10,527 | |||||||||
| Long-term liabilities: | |||||||||||
| Notes payable | 50,000 | 45,000 | |||||||||
| Asset retirement obligation | 1,748 | 1,620 | |||||||||
| Total long-term liabilities | 51,748 | 46,620 | |||||||||
| Total liabilities | 55,988 | 57,147 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, $0.001 par value, 5,000,000 shares authorized as of September 30, 2014, and December 31, 2013; 800,000 and 0 shares issued and outstanding as of September 30, 2014, and December 31, 2013, respectively | 1 | -- | |||||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized as of September 30, 2014, and December 31, 2013; 54,073,918 and 53,733,398 shares issued and outstanding as of September 30, 2014, and December 31, 2013, respectively | 54 | 54 | |||||||||
| Additional paid-in capital | 247,707 | 226,060 | |||||||||
| Cumulative translation adjustment | 23,132 | 15,025 | |||||||||
| Accumulated other comprehensive loss | (7 | ) | -- | ||||||||
| Accumulated deficit | (219,912 | ) | (197,594 | ) | |||||||
| Total stockholders' equity | 50,975 | 43,545 | |||||||||
| Total liabilities and stockholders' equity | $ | 106,963 | $ | 100,692 | |||||||
| 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 September 30, | For the nine months ended September 30, | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Revenues: | ||||||||||||||||||
| Oil and gas sales | $ | 8,472 | $ | 8,034 | $ | 26,782 | $ | 25,663 | ||||||||||
| Oilfield services | 1,722 | 194 | 3,088 | 256 | ||||||||||||||
| Total revenues | 10,194 | 8,228 | 29,870 | 25,919 | ||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||
| Lease operating expenses | 1,213 | 932 | 3,502 | 2,650 | ||||||||||||||
| Exploration costs | 1,935 | 7,158 | 8,846 | 17,355 | ||||||||||||||
| Property impairments | 4,540 | -- | 8,274 | 5,633 | ||||||||||||||
| Oilfield services costs | 941 | 164 | 1,987 | 412 | ||||||||||||||
| Depreciation, depletion, and amortization | 1,264 | 1,125 | 3,859 | 3,562 | ||||||||||||||
| Accretion expense | 22 | 22 | 69 | 67 | ||||||||||||||
| Stock compensation | 650 | 701 | 2,016 | 2,083 | ||||||||||||||
| General and administrative | 1,869 | 1,847 | 5,794 | 6,451 | ||||||||||||||
| Total operating costs and expenses | 12,434 | 11,949 | 34,347 | 38,213 | ||||||||||||||
| Operating loss | (2,240 | ) | (3,721 | ) | (4,477 | ) | (12,294 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||
| Interest expense | (802 | ) | (1,346 | ) | (2,143 | ) | (2,600 | ) | ||||||||||
| Interest and other income | 22 | 17 | 48 | 324 | ||||||||||||||
| Foreign exchange gain (loss) | (13,425 | ) | 11,512 | (15,361 | ) | (1,041 | ) | |||||||||||
| Total other income (expense) | (14,205 | ) | 10,183 | (17,456 | ) | (3,317 | ) | |||||||||||
| Net income (loss) | (16,445 | ) | 6,462 | (21,933 | ) | (15,611 | ) | |||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Decrease in market value of available for sale marketable securities | (7 | ) | -- | (7 | ) | -- | ||||||||||||
| Foreign currency translation adjustment | 7,144 | (7,660 | ) | 8,107 | 605 | |||||||||||||
| Comprehensive loss | $ | (9,308 | ) | $ | (1,198 | ) | $ | (13,833 | ) | $ | (15,006 | ) | ||||||
| Dividends on preferred stock | (385 | ) | -- | (385 | ) | -- | ||||||||||||
| Net income (loss) attributable to common stockholders | $ | (16,830 | ) | $ | 6,462 | $ | (22,318 | ) | $ | (15,006 | ) | |||||||
| Net loss per common share | ||||||||||||||||||
| Basic | $ | (0.31 | ) | $ | 0.12 | $ | (0.42 | ) | $ | (0.30 | ) | |||||||
| Diluted | $ | (0.31 | ) | $ | 0.12 | $ | (0.42 | ) | $ | (0.30 | ) | |||||||
| Weighted average common shares outstanding | ||||||||||||||||||
| Basic | 53,453 | 52,778 | 53,338 | 52,748 | ||||||||||||||
| Dilutive effect of stock options | -- | 958 | -- | -- | ||||||||||||||
| Diluted | 53,453 | 53,736 | 53,338 | 52,748 | ||||||||||||||
| FX ENERGY, INC. AND SUBSIDIARIES | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited) | |||||||||||
| (in thousands) | |||||||||||
| For the Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| 2014 | 2013 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | (21,933 | ) | $ | (15,611 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation, depletion, and amortization | 3,859 | 3,562 | |||||||||
| Accretion expense | 69 | 67 | |||||||||
| Amortization of loan fees | 379 | 1,055 | |||||||||
| Stock compensation | 2,016 | 2,083 | |||||||||
| Property impairments | 8,232 | 5,633 | |||||||||
| Unrealized foreign exchange losses | 15,340 | 1,014 | |||||||||
| Common stock issued for services | 657 | 694 | |||||||||
| Increase (decrease) from changes in working capital items: | |||||||||||
| Receivables | 5,340 | 6,595 | |||||||||
| Inventory | 2 | (7 | ) | ||||||||
| Other current assets | (112 | ) | 295 | ||||||||
| Other assets | -- | (25 | ) | ||||||||
| Accounts payable and accrued liabilities | (5,066 | ) | (2,483 | ) | |||||||
| Net cash provided by operating activities | 8,783 | 2,872 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Additions to oil and gas properties | (15,143 | ) | (16,656 | ) | |||||||
| Additions to other property and equipment | (730 | ) | (869 | ) | |||||||
| Net cash used in investing activities | (15,873 | ) | (17,525 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Repayment of credit facility | -- | (40,000 | ) | ||||||||
| Proceeds from common stock issuance | 615 | ||||||||||
| Proceeds from issuance of preferred stock, net of issuance costs | 18,361 | -- | |||||||||
| Purchases of marketable securities | (4,066 | ) | -- | ||||||||
| Proceeds from notes payable | 5,000 | 42,000 | |||||||||
| Payment of loan fees | -- | (2,036 | ) | ||||||||
| Net cash provided by (used) in financing activities | 19,910 | (36 | ) | ||||||||
| Effect of exchange-rate changes on cash | (506 | ) | (119 | ) | |||||||
| Net increase (decrease) in cash | 12,314 | (14,808 | ) | ||||||||
| Cash and cash equivalents at beginning of year | 11,153 | 33,990 | |||||||||
| Cash and cash equivalents at end of period | $ | 23,467 | $ | 19,182 | |||||||
