FX Energy reported the completion of facilities and start of production from the Grabowka-12 well in Poland. The well is producing at a rate of between 740,000 and 925,000 cubic feet of gas per day. Net revenue to FX Energy from the Grabowka-12 well is expected to generate approximately $500,000 per year over the next several years.

Two other wells, Grabowka-6 and 8, are expected to be worked over and begin production at a later date. FX Energy owns 100% working interest in the Grabowka field, which is located in western Poland in the Company's concession Block 287.

PL Energia, a gas distribution company in Poland, is the purchaser of the gas from the Grabowka field. Under the three well re-entry program, gas will be sold at a fixed rate of approximately $1.62 per mcf (approximately $2.70 per mmbtu based on 60% methane content). This price, which is lower than the current market price, was agreed upon in order to compensate the buyer for taking on all of the cost and risk of re-entering, completing the wells and paying for construction of the production facilities. Gas is being compressed and transported by truck.

The combination of the purchaser provided financing and the lower than normal gas price effectively creates an economic outcome similar to a royalty interest for FX Energy.

The Grabowka field was discovered in 1983-85. The wells were production tested but never produced commercially. In 2003, FX Energy acquired the rights to the 213,000 acre block where the field is located. Subsequently, FX Energy entered into an agreement with PL Energia, S.A.

FX Energy also reported that the Ostrowiec-1 well is currently drilling at a depth of 2,850 meters. Projected target depth of the Ca2 is 3,755 meters and the potential Rotliegend target at 4,080 meters. FX Energy owns 51% of the well; POGC owns 49%.

Tags: FX Energy