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FX Energy Reports Second Quarter Results; Second Quarter Revenues Up 24% From Last Year

SALT LAKE CITY, UT -- (Marketwired) -- 08/11/14 -- FX Energy, Inc. (NASDAQ: FXEN) today announced financial results for its second quarter ended June 30, 2014. The Company reported a second quarter net loss of $4.5 million, or $(0.08) per share. This compares to a net loss of $10.6 million, or $(0.20) per share, for the second quarter of 2013. Included in the Company's quarterly results were noncash (and intercompany) foreign exchange losses of $0.7 million in 2014 and $3.4 million in 2013. Without the foreign exchange losses, the Company would have recorded net losses of $3.8 million and $7.2 million for the quarters ended June 30, 2014 and 2013, respectively.

Higher Oil and Gas Prices Boost Second Quarter Revenues

Oil and gas revenues were $8.8 million during the second quarter of 2014, up 7% compared to the $8.2 million during the same quarter of 2013. Total revenues were $10.2 million for the 2014 second quarter, up 24% compared to the $8.2 million for the same quarter in 2013.

Gas prices during the second quarter of 2014 averaged $7.56 per Mcf, compared to $6.97 per Mcf during the same quarter of 2013, an increase of 9%. Prices for the Company's U.S. oil production also increased. Oil prices increased 8% over the year, averaging $83.62 per barrel in the second quarter of 2014, compared to $77.30 per barrel in the same quarter of 2013.

Total net oil and gas production was virtually unchanged at 1,103 million cubic feet equivalent (Mmcfe) during the second quarter of 2014, compared to 1,112 Mmcfe during the 2013 second quarter. Full production at the Company's Lisewo-1 well helped offset declines at the Zaniemysl and Roszkow wells. In addition, production was unexpectedly curtailed at the Kromolice-1 well for 40 days during the quarter in order to effect some flow line repairs. The Company's average daily production rate for the 2014 second quarter was 12.1 Mmcfe/day.

The Company expects production to begin at its Lisewo-2 well in the third quarter of this year, which could add approximately 1.7 Mmcf/d of net production.

Higher Oil and Gas Prices Produce Record First Half Oil and Gas Revenues

The Company reported a first half 2014 net loss of $5.5 million, or $(0.10) per share. This compares to a net loss of $22.1 million, or $(0.42) per share, for the first half of 2013. Included in the Company's first half results were noncash (and intercompany) foreign exchange losses of $1.9 million and $12.6 million in 2014 and 2013, respectively. Without the foreign exchange losses, the Company would have recorded net losses of $3.6 million and $9.5 million for the six-month periods ended June 30, 2014 and 2013, respectively.

Oil and gas revenues for the 2014 first six months reached record levels. The Company recognized oil and gas revenues of $18.3 million for the first six months of 2014, compared to $17.6 million for the same period of 2013. Total revenues for the first six months of 2014 were $19.7 million, compared to $17.7 million in the first six months of 2013.

Total net oil and gas production of 2,332 Mmcfe during the first six months of 2014, was essentially unchanged compared to 2,372 Mmcfe during the same period last year. Natural gas production in Poland was 2,188 Mmcf during the first six months of 2014, compared to 2,228 Mmcf during the first half of 2013. But for the unexpected production curtailment at Kromolice-1, the Company would have posted record production during the first half of 2014.

Gas prices during the first half of 2014 averaged $7.49 per Mcf, compared to $7.08 per Mcf during the same period of 2013, an increase of 6%. Oil prices increased 4% over the year, averaging $80.27 per barrel in the first half of 2014, compared to $76.89 per barrel in the same period of 2013.

Working Capital Changes Impact Operating Cash; Noncash Charges Continue to Vary

Net cash provided by operating activities of $3.7 million during the first half of 2014 decreased from net cash provided by operating activities of $4.2 million during the 2013 first half. The primary driver of the year-to-year decrease was changes in working capital items.

The noncash foreign exchange losses of $1.9 million and $12.6 million for the first half 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 intercompany 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.

Subsequent Event: Stock Offering

Clay Newton, Vice President of Finance, noted: "Our successful offering of convertible preferred shares last month will add to our overall liquidity. The additional financial flexibility provided by this offering will prove helpful as we continue our exploration efforts in Poland. Specifically, the funds from this offering will allow us to continue our exploration efforts in the Edge concession, where we have a significant 3-D seismic acquisition program planned, along with two wells to start before the end of the year."

Earnings Conference Call Today, Monday, August 11, 2014, at 4:30 PM Eastern (2:30 PM Mountain)

The Company will host a conference call and webcast today to discuss 2014 second quarter and first half results and update operational items at 4:30 p.m. Eastern Time. Conference call information is as follows: U.S. dial-in-number: 888-503-8171; International dial-in-number: 719-457-2633; Passcode: 2069509. 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 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 U.S. 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


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

                      FX ENERGY, INC., AND SUBSIDIARIES
                         Consolidated Balance Sheets
                               (in thousands)

                                                   June 30,    December 31,
                                                     2014          2013
                                                 -----------  -------------

Current assets:
  Cash and cash equivalents                      $     6,754  $      11,153
    Accrued oil and gas sales                          5,070          3,464
    Joint interest and other receivables               2,580          5,029
    VAT receivable                                       554          1,847
  Inventory                                               99            100
  Other current assets                                   283            234
                                                 -----------  -------------
      Total current assets                            15,340         21,827
                                                 -----------  -------------

Property and equipment, at cost:
  Oil and gas properties (successful-efforts
    Proved                                            91,455         85,244
    Unproved                                           2,517          2,404
  Other property and equipment                        12,331         11,857
                                                 -----------  -------------
    Gross property and equipment                     106,303         99,505
                                                 -----------  -------------
  Less accumulated depreciation, depletion, and
   amortization                                      (25,794)       (23,369)
                                                 -----------  -------------
      Net property and equipment                      80,509         76,136
                                                 -----------  -------------

Other assets:
  Certificates of deposit                                406            406
  Loan fees                                            2,041          2,323
                                                 -----------  -------------
      Total other assets                               2,447          2,729
                                                 -----------  -------------

Total assets                                     $    98,296  $     100,692
                                                 ===========  =============


                      FX ENERGY, INC., AND SUBSIDIARIES
                         Consolidated Balance Sheets
                               (in thousands,
                             except share data)

                                                  June 30,     December 31,
                                                    2014           2013
                                                -----------   -------------

Current liabilities:
  Accounts payable                              $     4,437   $       9,694
  Accrued liabilities                                   463             833
                                                -----------   -------------
    Total current liabilities                         4,900          10,527
                                                -----------   -------------

Long-term liabilities:
  Notes payable                                      50,000          45,000
  Asset retirement obligation                         1,740           1,620
                                                -----------   -------------
    Total long-term liabilities                      51,740          46,620
                                                -----------   -------------

      Total liabilities                              56,640          57,147
                                                -----------   -------------

Stockholders' equity:
  Preferred stock, $0.001 par value, 5,000,000
   shares authorized as of June 30, 2014, and
   December 31, 2013; no shares outstanding              --              --
  Common stock, $0.001 par value, 100,000,000
   shares authorized as of June 30, 2014, and
   December 31, 2013; 54,076,416and 53,733,398
   shares issued and outstanding as of June 30,
   2014, and December 31, 2013, respectively             54              54
  Additional paid-in capital                        228,697         226,060
  Cumulative translation adjustment                  15,988          15,025
  Accumulated deficit                              (203,083)       (197,594)
                                                -----------   -------------
  Total stockholders' equity                         41,656          43,545
                                                -----------   -------------

Total liabilities and stockholders' equity      $    98,296   $     100,692
                                                ===========   =============

                      FX ENERGY, INC., AND SUBSIDIARIES
       Consolidated Statements of Operations and Comprehensive Income
                  (in thousands, except per-share amounts)

                                 For the three months   For the six months
                                    ended June 30,        ended June 30,
                                 --------------------  --------------------
                                    2014       2013       2014       2013
                                 ---------  ---------  ---------  ---------
  Oil and gas sales              $   8,802  $   8,183  $  18,310  $  17,629
  Oilfield services                  1,361         20      1,366         62
                                 ---------  ---------  ---------  ---------
    Total revenues                  10,163      8,203     19,676     17,691
                                 ---------  ---------  ---------  ---------

Operating costs and expenses:
  Lease operating expenses           1,181        843      2,290      1,718
  Exploration costs                  3,591      4,034      6,911     10,198
  Property impairments               3,689      5,426      3,735      5,633
  Oilfield services costs              917        116      1,045        248
  Depreciation, depletion and
   amortization                      1,237      1,121      2,595      2,437
  Accretion expense                     23         22         47         45
  Stock compensation                   687        693      1,366      1,382
  General and administrative         1,972      2,780      3,925      4,604
                                 ---------  ---------  ---------  ---------
    Total operating costs and
     expenses                       13,297     15,035     21,914     26,265
                                 ---------  ---------  ---------  ---------

Operating loss                      (3,134)    (6,832)    (2,238)    (8,574)
                                 ---------  ---------  ---------  ---------

Other expense:
  Interest expense                    (685)      (626)    (1,341)    (1,254)
  Interest and other income             12        256         26        308
  Foreign exchange loss               (720)    (3,427)    (1,936)   (12,552)
                                 ---------  ---------  ---------  ---------
    Total other expense             (1,393)    (3,797)    (3,251)   (13,498)
                                 ---------  ---------  ---------  ---------

Net loss                            (4,527)   (10,629)    (5,489)   (22,072)

Other comprehensive income
  Foreign currency translation
   adjustment                          357      2,389        963      8,265
                                 ---------  ---------  ---------  ---------
Comprehensive loss               $  (4,170) $  (8,240) $  (4,526) $ (13,807)
                                 =========  =========  =========  =========

Net loss per common share
    Basic                        $   (0.08) $   (0.20) $   (0.10) $   (0.42)
    Diluted                      $   (0.08) $   (0.20) $   (0.10) $   (0.42)
Weighted average common shares
    Basic                           53,325     52,757     53,279     52,731
    Dilutive effect of stock
     options                             -          -          -          -
                                 ---------  ---------  ---------  ---------
    Diluted                         53,325     52,757     53,279     52,731
                                 =========  =========  =========  =========

                      FX ENERGY, INC., AND SUBSIDIARIES
                    Consolidated Statements of Cash Flows
                               (in thousands)

                                                   For the Six Months Ended
                                                           June 30,
                                                       2014         2013
Cash flows from operating activities:
  Net loss                                         $    (5,489) $   (22,072)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
    Depreciation, depletion and amortization             2,595        2,437
    Accretion expense                                       47           45
    Amortization of loan fees                              255          258
    Stock compensation                                   1,366        1,382
    Property impairments                                 3,694        5,633
    Unrealized foreign exchange losses                   1,929       12,519
    Common stock issued for services                       656          694
  Increase (decrease) from changes in working
   capital items:
    Receivables                                          2,010        6,226
    Inventory                                                1           (1)
    Other current assets                                   (49)          52
    Accounts payable and accrued liabilities            (3,304)      (2,929)
                                                   -----------  -----------
      Net cash provided by operating activities          3,711        4,244
                                                   -----------  -----------

Cash flows from investing activities:
  Additions to oil and gas properties                  (13,091)     (13,067)
  Additions to other property and equipment               (522)        (484)
                                                   -----------  -----------
      Net cash used in investing activities            (13,613)     (13,551)
                                                   -----------  -----------

Cash flows from financing activities:
  Proceeds from stock offering                             615           --
  Payment of loan fees                                      --          (53)
  Proceeds from notes payable                            5,000           --
                                                   -----------  -----------
      Net cash provided by (used in) financing
       activities                                        5,615          (53)
                                                   -----------  -----------

Effect of exchange-rate changes on cash                   (112)        (504)
                                                   -----------  -----------

Net decrease in cash                                    (4,399)      (9,864)
Cash and cash equivalents at beginning of year          11,153       33,990
                                                   -----------  -----------

Cash and cash equivalents at end of period         $     6,754  $    24,126
                                                   ===========  ===========

FX Energy, Inc.
3006 Highland Drive, Suite 206
Salt Lake City, Utah 84106
(801) 486-5555
Fax (801) 486-5575

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