AS FILED: MAY 28, 1999 SEC FILE NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT ON FORM S-3
UNDER THE SECURITIES ACT OF 1933
FX ENERGY, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 87-0504461
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(State or other jurisdiction of (I.R.S. Employer Identification No.
incorporation or organization)
3006 HIGHLAND DRIVE, SUITE 206, SALT LAKE CITY, UTAH 84106
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
DAVID N. PIERCE, 3006 HIGHLAND DRIVE, SUITE 206,
SALT LAKE CITY, UTAH 84106 (801) 486-5555
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
James R. Kruse
KRUSE, LANDA & MAYCOCK, L.L.C.
50 West Broadway, Eighth Floor
Salt Lake City, Utah 84101
Telephone: (801) 531-7090
Telecopy: (801) 531-7091
e-mail: [email protected]
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this registration statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED
CLASS OF MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ---------------- ----------- -------------- ----------------- ------------
Common Stock(2) 1,792,500 $6.5625 $11,763,281 $3,270
Purchase Rights(3)
(1) Bona fide estimate of maximum offering price solely for the purpose of
calculating the registration fee. The offering price for the common stock
being sold by selling stockholders is based on the average of the high and
low price reported on the Nasdaq National Market for the Registrant's
common stock on May 26, 1999 (rule 457(c)).
(2) Consists of shares held by or issuable to selling stockholders and shares
to be held following the conversion of preferred stock and exercise of
common stock purchase warrants. Pursuant to rule 416, there are also being
registered such additional securities as may become issuable as a result of
the antidilution provisions.
(3) Preferred stock purchase rights are evidenced by certificates for shares of
the common stock and automatically trade with the common stock. Value
attributable to such preferred stock purchase rights, if any, is reflected
in the market price of the common stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SEC.
THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS DATED MAY 28, 1999
FX ENERGY, INC.
1,792,500 SHARES OF COMMON STOCK
The stockholders of FX Energy named on page 18 under the caption "Selling
Stockholders" may publicly offer and sell from time to time common stock using
this prospectus in transactions
-on the Nasdaq National Market or otherwise.
at market prices, which may vary during the offering period, or at
-negotiated prices.
-in ordinary brokerage transactions, in block transactions, in privately
negotiated transactions, or otherwise.
The selling stockholders will receive all of the proceeds from the sale of
the shares and will pay all underwriting discounts and selling commissions
relating to the sale of the shares. FX Energy has agreed to pay the legal,
accounting, printing, and other expenses related to the registration of the sale
of the shares.
Nasdaq National Market trading symbol: "FXEN."
Closing Nasdaq sales price on May 26, 1999, $6.56 per share.
BEGINNING ON PAGE 3 OF THIS PROSPECTUS UNDER THE CAPTION "RISK FACTORS", FX
ENERGY DISCUSSES SEVERAL OF THE RISKS THAT AN INVESTOR SHOULD CONSIDER BEFORE
INVESTING IN THE COMMON STOCK.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE REGULATORY AUTHORITIES
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Dated May 28, 1999
INFORMATION INCORPORATED BY REFERENCE
The SEC allows FX Energy to "incorporate by reference" information FX
Energy files with the SEC, which means that FX Energy can disclose important
information to people by referring them to other documents that FX Energy files
with the SEC. The information incorporated by reference is considered to be
part of this prospectus. FX Energy has filed or furnished the following
documents with the SEC (File No. 0-25386) pursuant to the Securities Exchange
Act of 1934 and is incorporating those documents by reference in this
prospectus.
(1) Annual Report on Form 10-K for the year ended December 31, 1998 (the
"Form 10-K");
(2) Current reports on Form 8-K reporting events of February 16, March 2
and May 18, 1999;
(3) Quarterly report on Form 10-Q for the quarter ended March 31, 1999, as
amended May 18 and 27, 1999; and
(4) Proxy Statement relating to the FX Energy 1999 annual stockholders'
meeting (the "Proxy Statement").
All documents FX Energy files with the SEC after the date of this
prospectus will be deemed to be incorporated by reference in this prospectus and
to automatically update and supersede the information in this prospectus. Any
statement that is modified or superseded will not be deemed, except as so
modified or superseded, to be a part of this prospectus. References to this
prospectus include information incorporated by reference as well as any
subsequent prospectus supplements.
FX Energy will provide at no cost to each person to whom this prospectus is
delivered, upon written or oral request of that person, a copy of any or all of
the information that has been incorporated by reference in this prospectus but
not delivered with this prospectus (not including exhibits to that information
unless those exhibits are specifically incorporated by reference in that
information). Investors should direct requests to FX Energy, Inc., 3006
Highland Drive, Suite 206, Salt Lake City, UT 84106, Attention: Scott J. Duncan,
Telephone: (801) 486-5555.
<PAGE>
CORPORATE OVERVIEW
FX Energy is an independent oil and gas exploration, development and
production company, currently focused on oil and gas opportunities in the
Republic of Poland. As of May 1, 1999, FX Energy was the largest foreign oil
and gas exploration acreage holder in Poland, with exploration rights covering
approximately 15.8 million gross acres, including 12.4 million gross acres of
concessions and options covering approximately 3.4 million gross acres
controlled by the Polish Oil and Gas Company (POGC). FX Energy has strategic
alliances with Apache Corporation and POGC to explore for oil and gas,
capitalize on development opportunities, gain access to geological and
geophysical data, obtain project financing and conduct other activities in
Poland.
FX Energy is currently focusing its oil and gas exploration activities in
the Lublin, Carpathian, Pomeranian, Warsaw West and Baltic project areas in
Poland. FX Energy has several exploratory agreements with Apache covering all
of Poland, except FX Energy's Baltic Project Area, and with POGC covering the
Lublin, Carpathian, and Pomeranian project areas. Domestically, FX Energy has
limited oil production and reserves in Montana and Nevada, a drilling and well
servicing company in northern Montana and oil and gas exploration prospects in
several western states.
RISK FACTORS
You should consider carefully the following risk factors, along with the
other information in this prospectus and incorporated by reference, in deciding
whether to purchase FX Energy common stock. These factors, as well as other
items, may cause actual results to differ from those expressed in any forward-
looking statements in this prospectus.
Special Note About Forward-looking Information
This prospectus and the information incorporated by reference contain
statements about the future, sometimes referred to as "forward-looking"
statements. Forward-looking statements are typically identified by the use of
the words "believe," "may," "will," "should," "expect," "anticipate,"
"estimate," "project," "propose," "plan," "intend" and similar words and
expressions. Statements that describe FX Energy's future strategic plans, goals
or objectives are also forward-looking statements. Any forward-looking
statements, including those regarding FX Energy or its management's current
beliefs, expectations, anticipations, estimations, projections, proposals, plans
or intentions, are not guarantees of future performance or results or events and
involve risks and uncertainties, such as those discussed below.
The forward-looking statements are based on present circumstances and on FX
Energy's predictions respecting events that have not occurred, which may not
occur or which may occur with different consequences and timing than those now
assumed or anticipated. Actual events or results may differ materially from
those discussed in the forward-looking statements as a result of various
factors, including the risk factors discussed below. The cautionary statements
are intended to be applicable to all related forward-looking statements wherever
they appear in this prospectus or in information incorporated by reference. FX
Energy assumes no obligation to update such forward-looking statements or to
update reasons that actual results could differ materially from those
anticipated in such forward-looking statements.
FX ENERGY HAS INCURRED OPERATING LOSSES SINCE INCEPTION AND EXPECTS THOSE LOSSES
TO CONTINUE.
From its inception in January 1989 through December 31, 1998, FX Energy
incurred cumulative losses of $22.9 million. FX Energy reported losses before
extraordinary gains of $10.1 million, $6.7 million and $4.9 million for the
years ended December 31, 1998, 1997 and 1996, respectively. It also had losses
of $723,000 for the first quarter of 1999. FX Energy expects that its ongoing
exploration activities will continue to result in losses and that its
accumulated deficit will increase. FX Energy anticipates that it will incur
losses through 1999 and possibly beyond, depending on whether its exploration
and development activities in Poland result in sufficient production to cover
related operating expenses. Until sufficient cash flow from operations can be
obtained, FX Energy expects that it will need additional capital from offerings
of debt or equity securities or the sale of interests in its properties to fund
planned exploration and development programs in Poland.
FX ENERGY IS DEPENDENT ON THE SUCCESS OF ITS EXPLORATION AND DEVELOPMENT EFFORTS
IN POLAND.
FX Energy has allocated substantially all of its financial, management and
technical resources to its activities in Poland so FX Energy's success will
depend on the results of those activities. The success of FX Energy's efforts
in Poland will depend, in addition to the risks discussed below normally
associated with the exploration for oil and gas, on
-its ability to maintain its relationships with Apache, POGC and agencies
and enterprises of the Polish government;
-the establishment of significant oil or gas reserves through exploration
or appraisal/ development activities;
-if reserves are established, the completion of production,
transportation and marketing facilities and the negotiation of sales
contracts; and
-risks associated with conducting operations in a foreign country.
If FX Energy's activities in Poland are unsuccessful, the market price of the
common stock would likely suffer a material decline, and investors would face
the possible loss of all or a substantial portion of their investment.
FX ENERGY'S ACTIVITIES INVOLVE SIGNIFICANT RISKS THAT EXPLORATION OR DEVELOPMENT
WILL NOT RESULT IN COMMERCIAL PRODUCTION OR SUBSTANTIAL RESERVES.
The factors listed below, most of which are outside the control of FX
Energy, may prevent FX Energy from establishing commercial production or
substantial reserves as a result of its exploration and development activities
in Poland:
-FX Energy cannot assure that any well will encounter hydrocarbons;
there is no way to know in advance of drilling and testing whether any
prospect encountering hydrocarbons will yield oil or gas in sufficient
quantities cover drilling or completion costs or to be economically
viable;
-several test wells are typically required to explore each prospect or
exploration area;
-FX Energy may continue to incur exploration costs in specific areas even
if initial test wells are plugged and abandoned or, if completed for
production, do not result in production of commercial quantities; and
-drilling operations may be curtailed, delayed or canceled as a result of
numerous factors, including operating problems encountered during
drilling, weather conditions, compliance with governmental requirements
and shortages or delays in the delivery of equipment.
FX Energy and Apache select targets merely on interpretations of geological
and geophysical data, and FX Energy cannot assure that oil or gas is in fact
present or that any oil or gas that is present can be produced in commercial
quantities. Many of the exploration decisions will be based on scientific data
gathered by companies other than FX Energy or Apache prior to recent significant
technological advances. Data gathered by other companies and reprocessed or
otherwise enhanced by FX Energy or Apache may not be as reliable as data
gathered either using modern technology or under the supervision of FX Energy or
Apache.
The limited availability in Poland of some western exploration, drilling
and production equipment, supplies and services may adversely effect proposed
activities. In addition, oil and gas gathering, storage, transportation and
processing facilities may not be available in Poland or have limited capacity,
which could substantially increase the cost of exploration, development and
production and reduce potential financial returns.
FX Energy cannot assure its exploration or other efforts will be
successful.
FX ENERGY HAS HAD VERY LIMITED EXPLORATION SUCCESS TO DATE.
FX Energy has drilled two exploratory wells on the Baltic Project Area and
participated with Apache in drilling two exploratory wells on the Lublin Project
Area in Poland, none of which was completed for commercial production. FX
Energy has participated in eight exploratory test wells in the western United
States, only one of which has resulted in the establishment of limited
commercial production and small reserves. This small scale discovery did not
replace FX Energy's reserves depleted through production.
FX ENERGY IS SUBSTANTIALLY DEPENDENT ON THE PRESENCE AND PERFORMANCE OF ITS
STRATEGIC PARTNERS, APACHE, POGC, AND HOMESTAKE.
The failure of Apache, POGC or Homestake Mining Company to perform its
obligations under contracts with FX Energy would most likely have a material
adverse effect on FX Energy. In particular, FX Energy has prepared its
exploration budget through 2000 and into 2001 based on the participation of
Apache and, to a limited extent, POGC. In the future, FX Energy may become even
more reliant upon the expertise of its strategic partners. Apache has worldwide
oil and gas interests outside of Poland in which FX Energy does not participate.
If such separately held interests should become more promising than interests
held with FX Energy in Poland, Apache may focus its efforts, funds, expertise
and other resources elsewhere. In addition, should FX Energy's relationship
with Apache deteriorate or terminate, FX Energy's oil and gas exploratory
programs in Poland may be delayed significantly. Although FX Energy has rights
to participate in exploration and development activities on some POGC controlled
acreage, it has no right to initiate such activities outside the Lachowice area.
Further, FX Energy has no interest in the underlying agreements, licenses and
grants from the Polish agencies governing the exploration, exploitation,
development or production of such POGC controlled acreage. Thus, FX Energy's
program in Poland involving POGC controlled acreage would be adversely affected
if POGC should elect not to pursue activities on such acreage, if the
relationship between FX Energy, Apache and POGC should deteriorate or terminate
or if POGC or the government agencies should fail to fulfill the requirements of
or elect to terminate such agreements, licenses or grants.
FX Energy intends to seek potential partners to participate in the
exploration of its Baltic Project Area. FX Energy cannot assure that it will be
successful in obtaining the participation of any such partner, that the terms of
any such arrangement would be favorable to FX Energy or that such efforts will
not delay FX Energy's exploration and development projects.
FX Energy is similarly dependent on Homestake for ongoing exploration of
the Sudety gold prospect area. In view of Homestake's worldwide gold production
and exploration operations and the current depressed price of gold, FX Energy
cannot assure that Homestake will continue to explore the Sudety area. If
Homestake were to terminate exploration, FX Energy may choose not to explore the
property itself due to limited funding, current gold prices, the results of
exploration to date or other factors outside FX Energy's control. The failure
to complete required exploration or meet other requirements under the Sudety
concessions could result in the termination of FX Energy's rights in the
project.
BECAUSE OF ITS STRATEGIC ALLIANCES, FX ENERGY DOES NOT SEPARATELY CONTROL MOST
OF ITS ACTIVITIES IN POLAND.
In each of the strategic alliances between FX Energy and Apache, POGC and
Homestake, FX Energy has designated the other party as the operator or has
granted it other management or decision making powers and rights. Specifically,
Apache is the operator under the agreements relating to joint operations on the
Lublin, Carpathian, Pomeranian and Warsaw West project areas. POGC has the sole
right to initiate activities on areas controlled by it. Homestake is the
operator under agreements pertaining to joint operations on the Sudety project
area. As a result, FX Energy does not exercise sole control over the project
areas subject to these alliances or operations on such areas.
A NUMBER OF GOVERNMENT AUTHORIZATIONS ARE REQUIRED IN CONNECTION WITH FX
ENERGY'S ACTIVITIES IN POLAND.
In order to explore, exploit, develop and produce oil and gas in Poland,
the operator of the project is required to obtain:
-a mining usufruct agreement from the national concession authority that
grants the exclusive right to explore and exploit the hydrocarbons on
the covered area;
-an exploration concession from the national concession authority and
local authorities to obtain surface access to the covered area;
-a grant of surface rights from the surface owner; and
an exploitation concession from the national concession authority and
local authorities to develop and produce oil and gas.
Usufruct agreements and exploration concessions have been granted for all
of FX Energy's oil and gas exploration project areas in Poland to date. If
exploration discovers producible oil or gas, it would be necessary to negotiate
with national and local government officials of Poland regarding certain of the
terms and conditions of the required exploitation concessions. This may result
in increased costs and delays. These negotiations would include the
determination of a production/exploitation fee within the range of 0.01% to 0.5%
of the market value of the economically recoverable reserves estimated to be in
place, payable in five equal annual installments. In addition, the local
governments having jurisdiction over the production area must consent to the
grant of an exploitation license. All operations must comply with certain
environmental regulations and may require an environmental impact statement.
Additional governmental permits, licenses and agreements would be required
before exporting any oil or gas from Poland
FX ENERGY DEPENDS ON OFFICERS AND KEY EMPLOYEES.
FX Energy is dependent upon Mr. David N. Pierce, President and Chief
Executive Officer, Mr. Andrew W. Pierce, Vice-President and Chief Operating
Officer, and other key personnel for its various activities. In addition, FX
Energy is dependent on Mr. Jerzy B. Maciolek, Vice-President of International
Exploration, a Polish national who is instrumental in assisting FX Energy in its
operations in Poland. The loss of the services of any of these individuals may
materially and adversely affect FX Energy. FX Energy has entered into
employment agreements with Mr. David N. Pierce, Mr. Andrew W. Pierce and Mr.
Jerzy B. Maciolek. FX Energy does not maintain key man insurance on any of its
employees.
FX ENERGY WOULD FACE RISKS OF MANAGING SIGNIFICANT GROWTH IF ACTIVITIES IN
POLAND RESULT IN ESTABLISHING PRODUCTION.
FX Energy has had only limited operations in Poland. If its activities in
Poland are successful, it may experience rapid growth. FX Energy's ability to
manage this growth will depend, in part, upon its ability to:
-attract and retain quality management and technical personnel;
-raise and manage the deployment of significant amounts of capital for
the development of any new discoveries, acquisitions or the construction
of production, processing and transportation facilities;
-rely on Apache and POGC for technical and managerial resources to
develop markets for oil and gas produced and to fund their share of
capital requirements; and
-comply with governmental regulations.
FX ENERGY AND APACHE WILL HAVE TO COMPLETE GATHERING, PROCESSING AND
TRANSPORTATION FACILITIES BEFORE OIL OR GAS CAN BE PRODUCED IN POLAND
If their activities in Poland result in gas production, FX Energy and
Apache will need to obtain required permits and design, construct and place into
operation oil and gas gathering, storage, processing and transportation
facilities. FX Energy and Apache cannot assure that any oil or gas reserves that
may be discovered will be in close proximity to any existing crude oil pipeline
or the gas transmission network in Poland. FX Energy and Apache do not have
arrangements to use any pipelines in Poland. Therefore, wells may be
temporarily shut-in for lack of a market or due to the unavailability of
pipeline and/or gathering system capacity. This would correspondingly delay
cash flow. Because of the cost of production and marketing facilities, it may
not be economically feasible to begin production even if substantial reserves
are identified. Amounts that FX Energy may budget for the construction of
gathering, storage, transmission and processing facilities may not be
sufficient.
FX ENERGY EXPECTS THAT IT WILL NEED ADDITIONAL CAPITAL FOR EXPLORATION AND
DEVELOPMENT PROGRAMS IN POLAND.
FX Energy may require substantial amounts of additional capital during 2000
and 2001 to fund:
-proposed activities in the Lachowice area;
-possible other development or appraisal projects;
-development of any hydrocarbon discovery resulting from the Apache
exploration program that is successful in proving oil or gas reserves,
including additional development drilling and construction costs for
production, processing and marketing facilities; and
-general corporate purposes.
FX Energy has budgeted $10.9 million for its share of expenditures for the
Lachowice project to reenter up to three wells, and if warranted, drill up to
three additional wells and construct production and gathering facilities.
Actual expenditures may vary depending on the results of reentering and drilling
wells. In addition to $3.4 million of currently available funds allocated for
proposed Lachowice area activities, FX Energy expects that it will require
approximately $7.5 million of additional funds for this project.
FX Energy will also require additional capital if it is able, with Apache,
to undertake oil and gas development opportunities on POGC controlled
properties that FX Energy and Apache believe warrant further appraisal or
development drilling. The amount of capital required for these possible
purposes will depend on the nature of the planned activities, expected results,
transportation and marketing alternatives and other factors.
If planned exploration in the Lublin, Carpathian, Pomeranian or Warsaw West
areas results in the discovery of significant reserves, FX Energy will require
capital to fund a multi-well development program, install oil or gas storage,
handling and transportation facilities or purchase other assets required to
support large-scale production. FX Energy is unable to predict the timing or
amount of additional capital that may be required because those matters will be
dependent on future specific exploration results. However, FX Energy does
recognize that tens of millions of dollars over several years may be required.
FX Energy has no arrangement for any such additional financing, but may
seek required funds from the sale of debt and equity securities, project
financing, strategic alliances with other energy or financial partners or other
arrangements. Obtaining additional financing may dilute the interest of
existing shareholders in FX Energy or FX Energy's interest in the specific
project being financed. FX Energy cannot assure that additional funds could be
obtained or, if obtained, would be on terms favorable to FX Energy.
In addition to planned exploration and possible development activities in
Poland, FX Energy will require funds for general corporate purposes after the
end of 2000 if it does not then have revenues from operations.
THERE ARE NO TRANSPORTATION OR MARKETING ARRANGEMENTS FOR OIL OR GAS THAT MAY BE
PRODUCED BY FX ENERGY IN POLAND.
FX Energy and Apache have no transportation, refining or marketing
arrangements relating to oil or gas that may be produced from any of FX Energy's
project areas in Poland, other than a general agreement for the sale of gas that
may possibly be produced from the Lachowice area. FX Energy or Apache will have
to establish transportation, refining or marketing arrangements to sell any oil
or gas discovered and produced in Poland. FX Energy or Apache may be unable to
arrange for the exportation of oil or gas if they desire to do so. If FX Energy
establishes oil and/or gas reserves, the production, marketability and ultimate
profitability of such natural gas operations will depend on the availability,
proximity and capacity of gathering systems, pipelines and processing
facilities. If production is established in the Lachowice area, it will be
necessary to negotiate the specific terms of arrangements for the construction
of processing facilities and pipelines and the sale and transportation of gas.
FX ENERGY IS DEPLETING ITS CURRENT RESERVES AND CANNOT ASSURE NEW RESERVES WILL
BE ESTABLISHED.
FX Energy's existing limited reserves in Montana and Nevada are being
depleted by production. Therefore, FX Energy's revenues will continue to
decline unless its reserves are replaced and expanded by successful drilling or
the acquisition of additional reserves. FX Energy's success will be largely
dependent on its ability to discover new oil and gas reserves through
participation in exploration and development opportunities or acquisition of
proved producing reserves in Poland or the western United States, all of which
involve substantial risks. FX Energy cannot assure its program in Poland will
result in the discovery of new reserves to replace or expand FX Energy's
reserves.
FX ENERGY IS SUBJECT TO THE VOLATILITY OF COMMODITY PRICES AND MARKETS.
Oil and gas prices have been and are likely to continue to be volatile and
subject to wide fluctuations in response to the following factors:
-relatively minor changes in the supply of and demand for oil and gas;
-market uncertainty;
-political conditions in international oil and gas producing regions;
the extent of production and importation of oil and gas into existing or
potential markets;
-the level of consumer demand;
-weather conditions affecting production, transportation and consumption;
the competitive position of oil or gas as a source of energy as compared
with coal, nuclear energy, hydroelectric power and other energy sources;
-the availability, proximity and capacity of gathering systems, pipelines
and processing facilities;
-the refining capacity of prospective oil purchasers;
-the effect of government regulation on the production, transportation
and sale of oil and gas; and
-other factors beyond the control of FX Energy.
FX Energy cannot control or influence the above factors. Oil prices, for
example, have only recently rebounded from their lowest level in over two
decades. In addition to the direct impact on the prices at which oil or gas may
be sold, adverse changes in oil or gas prices and the related effects on the oil
and gas industry in general would likely have an adverse effect on FX Energy's
ability to obtain funding from lending institutions, industry participants, the
sale of additional securities and other sources.
TRADING PRICES FOR THE COMMON STOCK HAVE BEEN VOLATILE DUE TO SEVERAL FACTORS
THAT WILL LIKELY CONTINUE TO AFFECT THE PRICE FOR THE COMMON STOCK.
FX Energy common stock has traded as low as $3.87 and as high as $13.37
between May 1998 and April 1999. Some of the factors leading to this volatility
include:
-the outcome of individual wells or the timing of exploration efforts in
Poland, as evidenced by significant price declines following the
announcement by FX Energy that each of its first four exploratory wells
in Poland were dry holes;
-the results of other operations in which FX Energy has an interest in
Poland;
-the potential sale by FX Energy of newly issued common stock to raise
capital or by existing stockholders of restricted securities;
price and volume fluctuations in the general securities markets that are
unrelated to results of operations of FX Energy;
-the investment community's view of companies with assets and operations
outside the United States in general and in Poland in particular;
-actions or announcements by Apache, POGC, and Homestake that may affect
FX Energy;
-prevailing world prices for oil and gas;
the potential of FX Energy's current and planned activities in Poland;
and
-changes in stock market analysts' recommendations respecting FX Energy,
other oil and gas companies or the oil and gas industry in general.
FX Energy expects that it will encounter additional exploration failures in
Poland that will adversely affect the trading prices for the common stock.
INVESTORS' ABILITY TO TRADE COMMON STOCK MAY BE LIMITED BY TRADING VOLUME.
The trading volume in FX Energy common stock has been relatively limited.
Therefore, it may not be possible for an investor to sell a significant number
of shares at or near quoted prices or at all if an investor were to seek to do
so.
FX ENERGY ENCOUNTERS VARIOUS OPERATING HAZARDS AND UNINSURED RISKS.
FX Energy's oil and gas drilling and production operations are subject to
hazards incidental to the industry. These hazards include blowouts, cratering,
explosions, uncontrollable flows of oil, natural gas or well fluids, fires,
pollution, releases of toxic gas and other environmental hazards and risks.
These hazards can cause personal injury and loss of life, severe damage to and
destruction of property and equipment, pollution or environmental damage and
suspension of operations. To lessen the effects of these hazards, FX Energy
maintains insurance of various types to cover its domestic operations. FX
Energy cannot assure that the general liability insurance of $5.0 million
carried by it or the $25.0 million carried by Apache, as the operator of the
Lublin, Carpathian, Pomeranian and Warsaw West project areas, can continue to be
obtained on reasonable terms. This insurance, however, does not cover all of
the risks involved in oil and gas exploration, drilling and production. Where
insurance coverage does exist, the amount of coverage may not be sufficient to
pay the full amount of such liabilities. FX Energy may not be insured against
all losses or liabilities that may arise from all hazards because such insurance
is unavailable at economic rates, because of limitations on existing insurance
coverage or other factors. For example, FX does not maintain insurance against
risks related to violations of environmental laws. FX Energy would be adversely
affected by a significant adverse event that is not fully covered by insurance.
Further, FX Energy cannot assure that it will be able to maintain adequate
insurance in the future at rates it considers reasonable.
FX ENERGY IS SUBJECT TO POLITICAL, ECONOMIC, REGULATORY AND SIMILAR RISKS
REGARDING ITS ACTIVITIES IN POLAND.
FX Energy's oil and gas exploration, development and production activities in
Poland are and will be subject to ongoing uncertainties and risks, including:
-possible changes in government personnel, the development of new
administrative policies and practices and political conditions in Poland
which may affect the administration of agreements with governmental
agencies or enterprises;
-possible changes to the laws, regulations and policies applicable to FX
Energy and Apache or the oil and gas industry in Poland in general;
-uncertainties as to whether the laws and regulations will be applicable
in any particular circumstance;
-uncertainties as to whether FX Energy and Apache will be able to enforce
their rights in Poland;
-the requirement to demonstrate, to the satisfaction of the Polish
authorities, FX Energy's and Apache's compliance with governmental
requirements respecting exploration expenditures, results of
-exploration, environmental protection matters and other factors;
the inability to recover previous payments to the Polish government made
under the exploration rights or any other costs incurred respecting
those rights if FX Energy were to lose or cancel its exploration and
-exploitation rights at any time;
-political instability and possible changes in government;
-export and transportation tariffs;
local and national tax requirements; and
-expropriation or nationalization of private enterprises and other risks
arising out of foreign government sovereignty over the project areas.
The amounts in FX Energy's agreements with Apache, Homestake, POGC and the
government of Poland relating to FX Energy's activities in Poland are expressed
in United States Dollars. Conversions between United States Dollars and Polish
Zlotys are made on the due date of amounts to be paid or received. FX Energy's
activities in Poland may be affected by fluctuations in exchange rates between
the Polish Zloty, the United States Dollar, the Euro and other currencies. The
exchange rate for the Polish Zloty was 3.51, 3.51 and 2.85 per United States
Dollar as of December 31, 1998, 1997 and 1996, respectively. FX Energy has not
hedged its foreign currency activities in the past and has no future plans to do
so. Currencies used by FX Energy may not be convertible at satisfactory rates.
In addition, the official conversion rates between United States and Polish
currencies may not accurately reflect the relative value of goods and services
available or required in Poland. Further, inflation may lead to the devaluation
of the Polish Zloty.
FX ENERGY MAY BE RESTRICTED AS TO THE AMOUNT, MANNER OR TIMING OF THE
REPATRIATION TO THE UNITED STATES OF POSSIBLE EARNINGS FROM ITS ACTIVITIES IN
POLAND.
Currently, there are no restrictions on the ability of a Polish entity to
repay debt to a foreign parent corporation or to pay fair market compensation to
a foreign parent corporation for legitimate services. However, Polish limited
liability companies such as those through which FX Energy conducts most of its
activities in Poland can pay dividends only once annually and only to the
extent of profits, as determined in compliance with Polish accounting and
regulatory requirements and as verified by an audit satisfying Polish
professional standards. Although FX Energy is entitled to a credit against its
United States tax obligations equal to any foreign taxes paid, FX Energy may not
be able to use this credit unless FX Energy owes taxes in the United States.
FX ENERGY'S ACTIVITIES ARE SUBJECT TO LAWS AND REGULATIONS IN POLAND, INCLUDING
MEASURES RELATING TO THE PROTECTION OF THE ENVIRONMENT.
Poland has a regulatory regime governing exploration and development,
production, marketing, transportation and storage of oil and gas. These
provisions were recently promulgated and are relatively untested. Therefore,
there is little or no administrative or enforcement history or established
practice that can aid FX Energy or Apache in evaluating how the regulatory
regime will affect FX Energy's operations. It is possible that such
governmental policies will change or that new laws and regulations,
administrative practices or policies or interpretations of existing laws and
regulations will materially and adversely affect FX Energy's activities in
Poland. In certain instances, Poland's laws, policies and procedures may be
changed to conform to the minimum requirements that must be met before Poland is
admitted as a full member of the European Union. The government of Poland has
announced that it intends to privatize various segments of POGC in the near
future. Currently, no specific plans have been announced respecting the method
or timing of such privatization. FX Energy cannot predict how the possible
privatization of POGC will affect FX Energy.
Operations on FX Energy's product areas are subject to environmental laws
and regulations in Poland that provide for restrictions and prohibitions on
spills, releases or emissions of various substances produced in association with
oil and gas exploration and development. Additionally, if significant
quantities of gas are produced with oil, regulations prohibiting the flaring of
gas may inhibit oil production. In such circumstances, the absence of a gas
gathering and delivering system may restrict production or may require
significant expenditures to develop such a system prior to producing oil and
gas. FX Energy or Apache may be required to prepare and obtain approval of
environmental impact assessments by governmental authorities in Poland prior to
commencing certain oil and gas production, transportation and processing
functions.
FX Energy and Apache cannot assure that they have complied with all
applicable laws and regulations in drilling four exploratory wells, acquiring
several thousand kilometers of seismic data or completing other activities in
Poland to date. More restrictive regulations or administrative policies or
practices may be adopted by the Polish government. The cost of compliance with
current regulations or any changes in environmental regulations could require
significant expenditures. Further, breaches of such regulations may result in
the imposition of fines and penalties, any of which may be material. These
environmental costs could have a material adverse effect on FX Energy's
financial condition or results of operations in the future.
FX ENERGY'S CORPORATE DOCUMENTS MAY INHIBIT A TAKEOVER OR SIMILAR ACTION.
Provisions in FX Energy's articles of incorporation and bylaws could:
-discourage potential acquisition proposals;
-delay or prevent a change in control of FX Energy;
-diminish stockholders' opportunities to participate in tender offers
for common stock, including tender offers at prices above the then
current market prices; or
-inhibit increases in the market price of common stock that could result
from takeover attempts.
FX ENERGY'S BUSINESS COULD BE ADVERSELY AFFECTED BY YEAR 2000 COMPLIANCE ISSUES.
During the next year, many computer programs may not recognize calendar
dates beginning in the year 2000. This problem could force computers such as
those on which FX Energy relies to either shut down or provide incorrect data.
To address this problem, FX Energy has examined its own computer systems,
contacted software and hardware suppliers to confirm year 2000 compliance and,
where appropriate, upgraded systems.
In addition to its own computer systems, FX Energy is dependent
substantially on vendor compliance. In connection with its activities in the
United States and in Poland, FX Energy interacts with POGC and Apache as well as
other suppliers, customers, creditors and financial service organizations
domestically and globally that use computer systems. Substantially all of FX
Energy's core vendors (banking, insurance, legal and accounting, stock market-
makers, strategic partners, oil purchasers, communications, etc.) have either
already certified they are year 2000 compliant or indicated they have a program
underway to become year 2000 compliant before the year 2000. FX Energy has not
completed its survey of the other significant businesses with which FX Energy
interacts during the normal course of business. Such significant business by be
unable or unwilling to certify that their computer systems are year 2000
compliant.
It is impossible for FX Energy to monitor all computer systems of all of
its core vendors or other significant businesses with which FX Energy interacts,
particularly those of firms outside the United States. Undetected errors or
defects may remain in systems that FX Energy or third parties believe to be year
2000 compliant. FX Energy may experience disruptions or unexpected costs if
internal or external systems on which it relies encounter errors or defects.
Further, FX Energy may encounter delays in processing and reporting
transactions, reviewing technical data or completing other normal business
activities, which could have a material adverse effect on FX Energy.
RECENT DEVELOPMENTS
In May 1999, FX Energy completed the sale of approximately 1.8 million
shares of common stock for net proceeds of approximately $7.2 million.
CURRENT ACTIVITIES
Apache first agreed to fund exploration on an FX Energy project in Poland
in 1997. Following their first agreement related to the Lublin project area, FX
Energy and Apache entered additional agreements to explore jointly the
Carpathian, Pomeranian and Warsaw West areas. As a result of these agreements
signed since 1997 Apache has agreed to pay for and perform certain requirements
in order to earn a fifty-percent interest in FX Energy's Lublin and Carpathian
project areas. Under the agreements, Apache has paid FX Energy $950,000 in
initial cash consideration and agreed to pay FX Energy's pro rata share of costs
to:
-drill ten exploratory wells, including drilling and, if successful,
completion costs for seven exploratory wells in the Lublin Project Area
(Apache has drilled two of the seven wells in the Lublin Project Area to
date) and the costs to drill (excluding completion costs) three
exploratory wells in the Carpathian Project Area;
-acquire a minimum of 2,000 kilometers of 2D seismic, including 1,650
kilometers of 2D seismic in the Lublin Project Area acquired by Apache
during 1998 and 350 kilometers of 2D seismic in the Carpathian Project
Area yet to be acquired;
-pay all concession, usufruct and other leasehold costs during the first
three years of the six-year exploration period of the Lublin and
Carpathian project areas; and
-pay all general and administrative costs relating to activities in
Poland through the end of 1999.
In addition, FX Energy and Apache are 50/50 partners in the Pomeranian and
Warsaw West project areas. Apache is the operator of all project areas covered
by the FX Energy and Apache agreements.
During late 1998, Apache acquired over 1,650 kilometers of 2D seismic data
and commenced drilling two exploratory wells in the Lublin area. Both of these
wells were determined to be exploratory dry holes during February 1999. Apache
still has the contractual obligations to pay for all of the following drilling
and 2D seismic data acquisition costs as part of its requirements to earn a
fifty-percent interest in the Lublin and Carpathian project areas:
-drill the remaining five exploratory wells on the Lublin Project Area by
the end of 1999;
-acquire 350 kilometers of 2D seismic on the Carpathian Project Area
during 1999 and 2000; and
-drill three exploratory wells by mid-2001 on the Carpathian Project
Area.
FX Energy and Apache will share equally in the costs to:
-develop POGC's Lachowice gas discovery during 1999;
-drill an exploratory test, exclusive of any POGC participation costs, if
any, on the Pomeranian Project Area during 2000; and
-drill exploratory tests on the Warsaw West Project Area during 2001.
FX Energy and Apache entered into option agreements with POGC during 1997
and 1998 whereby each has an independent, reciprocal right to participate with
up to a one-third interest each, in hydrocarbon exploration of POGC controlled
areas near the Lublin, Carpathian and Pomeranian project areas. In turn, POGC
has the reciprocal right to participate with up to a one-third interest,
determined on a block by block basis, in exploration of the Lublin, Carpathian
and Pomeranian project areas. The option agreements with POGC do not include
the 2.1 million acre Baltic and 2.9 million acre Warsaw West project areas.
The option agreements cover areas controlled by POGC and FX Energy-Apache
as follows:
POGC FX ENERGY-
PROJECT AREA CONTROLLED APACHE TOTAL
- ------------- ---------- ----------- -------
ACREAGE (IN MILLIONS)
--------------------------------
Lublin 0.6 5.0 5.6
Carpathian 1.5 1.4 2.9
Pomeranian 1.3 2.2 3.5
---- ---- ----
Total 3.4 8.6 12.0
==== ==== ====
FOCUS FOR 1999:
-Lachowice Field Development. FX Energy and Apache have agreed to begin
testing and recompleting up to three wells during the second quarter of
1999, and if warranted, to commence additional developmental drilling
and construction of production facilities in order to initiate
production in 2000.
-New Appraisal/Development Projects. At the invitation of POGC, FX
Energy and Apache have initiated review of data on several existing POGC
discoveries, shut-in fields and under-developed properties in Poland
with a view to possible joint production operations under arrangements
similar to the Lachowice model.
-Ongoing Exploration Program. FX Energy and Apache will continue their
ongoing exploration program this year in Poland. Apache has committed
to spud five more wells this year and to pay FX Energy's share of costs.
POGC is expected to join in this program for up to a one-third interest.
-In addition, FX Energy and Apache will acquire new seismic in the Lublin
and Carpathian project areas and will reprocess existing POGC seismic in
their other project areas to prepare for the continuation of their
exploration program in 2000 and 2001.
Lachowice Field Development
The Lachowice Field is an undeveloped gas discovery on a POGC concession.
Between 1982 and 1994 POGC drilled nine wells in the Lachowice Concession, three
of which are shut-in gas discoveries that POGC tested at an average rate of 5.7
MMcf of gas per day per well from 10,000-13,000 feet in a Devonian reef
structure. On February 26, 1999, FX Energy, Apache and POGC entered into an
agreement (the "Lachowice Agreement") to jointly develop the Lachowice Field
with Apache as operator. Under terms of the Lachowice Agreement, in order to
each earn a one-third interest in the project, FX Energy and Apache will each
pay fifty-percent of the costs for the following activities: (1) reenter, test
and recomplete up to three shut-in gas wells; (2) if warranted, drill three
additional wells; and, (3) if warranted, construct production and gathering
facilities. All costs and net revenues thereafter, including additional
development drilling and lease operating costs, will be shared one-third each by
FX Energy, Apache and POGC.
Testing and reentry operations on the Lachowice Field are expected to
commence during the second quarter of 1999, with initial production scheduled
for 2000. FX Energy expects to spend approximately $500,000 to $1,000,000 for
its pro rata share of costs to reenter, test and complete up to three shut-in
gas wells during 1999, $2.5 million per well to drill up to three or four
additional development wells during 2000 and $1.5 million for production
facilities during 2000. Testing the shut-in gas wells will be comprehensive
because of the significance for additional exploration in the area and may take
several months before definitive results are available.
New Appraisal/Development Projects
In January 1999, FX Energy and Apache agreed to broaden the scope of their
joint operations in Poland by aggressively pursuing oil and gas development
opportunities with POGC, targeting properties with proved recoverable reserves
that FX Energy and Apache believe warrant further appraisal/ development
drilling and/or infrastructure expenditures for production, transportation and
processing facilities. The recent AMI agreement between FX Energy and Apache was
signed in support of this endeavor. POGC responded positively to this
initiative by FX Energy and Apache and invited them to review the geologic and
production test data on wells in several fields in western Poland on POGC
concessions with a view to undertaking joint operations to complete development
drilling, construct production and gathering facilities and explore leads in the
same geological trend. Production, engineering, seismic and other data provided
by POGC indicate the properties should meet the guidelines and parameters FX
Energy and Apache have set for themselves.
FX Energy and Apache are currently reviewing the geologic and production
test data made available by POGC and expect to complete their review and
analysis in the next few weeks, at which time all three companies plan to meet
to determine whether they are able to negotiate mutually acceptable terms. If
the parties do reach an agreement, the recently signed Lachowice Agreement will
serve as the legal framework for such activities, which in turn should reduce
the time required to document and obtain approval of the resulting agreement.
Until definitive terms are agreed upon and a formal development agreement
is signed by all parties, FX Energy cannot estimate the amount of funding or the
work schedule that might be required. In some instances, FX Energy's ability to
fund its obligations for this kind of development project may be dependent on
obtaining project financing and other related factors.
Ongoing Exploration Program
Five additional wells are planned for this year in the Lublin Project Area.
The first well location will test a Devonian geologic formation target in block
360. The second well will test a Cambrian geologic formation on block 257.
Commencement of drilling on the first two of the five additional wells planned
for 1999 is expected to begin in the second quarter of 1999. FX Energy and its
partners are studying several additional Lublin prospects, three of which will
be selected for drilling during 1999. Current plans call for a third rig to be
added to the drilling operations in Lublin during the summer of 1999.
Under agreements between FX Energy and Apache, Apache has agreed to perform
certain requirements in order to earn a 50% interest in FX Energy's Lublin and
Carpathian project areas. Among the requirements, Apache agreed to pay FX
Energy's pro rata share of costs to drill ten exploratory wells (the "carried
wells"), including two wells previously drilled on the Lublin Project Area
during late 1998. Of the eight carried wells yet to be drilled, Apache must pay
for FX Energy's pro rata share of costs to drill and complete five wells in the
Lublin Project Area and FX Energy's pro rata share of costs to drill (excluding
completion costs) three wells in the Carpathian Project Area. Under terms of
the AMI with Apache, FX Energy may elect, with Apache's consent, to apply any
one of the yet to be drilled carried wells to projects outside of the Lublin and
Carpathian project areas.
If the exploration activities in Poland funded by Apache result in
discoveries that warrant development, FX Energy will be obligated to fund its
share of costs prior to establishing production. These costs may include costs
for completing certain wells, undertaking a multi-well development program,
installing oil and gas processing and transportation facilities, and purchasing
other assets required to support production.
FX Energy had $3.8 million of cash and marketable securities with no long-
term debt as of March 31, 1999, an amount which, along with $7.2 million of
additional capital raised through a private placement of common stock during the
second quarter of 1999, is expected to be sufficient to fund FX Energy's minimal
exploration and operating requirements during the remainder of 1999 and most of
2000. FX Energy does intend to seek additional capital, if warranted, to fund
additional activities on the Lachowice project area, possible appraisal/
development activities with Apache on additional POGC project areas and
development of any discoveries resulting from the Apache funded exploration
program.
CAPITALIZATION
The following table sets forth the actual capitalization of FX Energy as
of March 31, 1999, as adjusted only to give effect to the subsequent sale by FX
Energy of approximately 1.8 million shares of common stock for net proceeds of
approximately $7.2 million.
AS OF MARCH 31, 1999
------------------------
ACTUAL AS ADJUSTED
--------- -------------
(IN THOUSANDS)
LONG-TERM DEBT $ $
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 30,000,000 shares
authorized; 13,054,503 actual shares issued and
outstanding as of March 31, 1999, and 14,847,003
shares issued and outstanding as adjusted 13 15
Notes receivable from officers (1,431) (1,431)
Additional paid-in capital 31,113 38,281
Accumulated deficit (23,624) (23,624)
--------- ---------
Total stockholders' equity 6,071 13,241
--------- ---------
TOTAL CAPITALIZATION $ 6,071 $ 13,241
========= =========
NO NET PROCEEDS TO FX ENERGY
FX Energy will not receive any net proceeds from the sale by the selling
stockholders of the common stock covered by this Prospectus.
NO DIVIDENDS
FX Energy has not paid dividends on the common stock. FX Energy seeks
growth and expansion of its business through the reinvestment of profits, if
any, and does not anticipate that it will pay dividends on the common stock in
the foreseeable future.
SELLING STOCKHOLDERS
The following table provides certain information, as of the date of this
prospectus, respecting the selling stockholders, the shares of common stock held
by them, to be sold, and to be held following the offering, assuming the sale by
such selling stockholders of all shares of common stock offered. This
information has been provided by the selling stockholders. There are currently
no agreements, arrangements or understanding regarding the sale of any of the
shares. The shares are being registered to permit public secondary trading of
the shares. The selling stockholders may offer the shares for resale from time
to time.
COMMON STOCK
----------------------------------------------
BENEFICIALLY BENEFICIALLY
OWNED BEFORE OWNED AFTER
OFFERING OFFERING
--------------- ----------------
NUMBER
SELLING STOCKHOLDER NUMBER PERCENT TO BE SOLD NUMBER PERCENT
- ----------------------------- -------- ------- ---------- ------ -------
Apache Corporation(1)........ 250,000 1.7% 250,000 -- --
Hexagon Partners, Ltd........ 37,500 0.3 37,500 -- --
Lovejoy Associates MPPSP(2).. 17,500 0.1 7,500 10,000 *
Lovejoy, Thomas B. IRA 104,500 0.7 55,000 49,500 0.3
Rollover(2)................
Murry Capital II, LLC........ 12,500 * 12,500 -- --
Oppenheimer Enterprise Fund.. 600,000 4.0 130,000 470,000 3.2
Sidro S.A.................... 130,000 0.9 100,000 30,000 0.2
Spindrift Partners, L.P...... 1,100,000 7.4 1,100,000 -- --
Spindrift Investors (Bermuda) 100,000 0.7 100,000 -- --
L.P........................ --------- ----- --------- ------- ----
Total 2,352,000 15.8% 1,792,500 559,500 3.7
========= ===== ========= ======= ====
* Less than 0.1%.
(1) FX Energy has strategic alliances with Apache Corporation for the
exploration, production, and development of oil and gas covering all of
Poland, except FX Energy's Baltic Project Area.
(2) Affiliates of Thomas B. Lovejoy, a director and vice-chairman of FX Energy.
In addition, Mr. Lovejoy owns 154,367 shares directly and 41,000 shares
held in trust for the benefit of Mr. Lovejoy's children, 10,000 shares
held by Mr. Lovejoy's spouse's IRA account, and 200,000 shares held by
Lovejoy Associates, Inc. (of which Mr. Lovejoy is sole owner).
DESCRIPTION OF SECURITIES
FX Energy is authorized to issue 30,000,000 shares of common stock, $0.001
par value; and 5,000,000 shares of preferred stock (including 500,000 shares of
Series A Preferred Stock), $0.001 par value.
COMMON STOCK
As of May 17, 1999, FX Energy had 14,847,003 shares of common stock issued
and outstanding. The holders of common stock are entitled to one vote per share
on each matter submitted to a vote at any meeting of stockholders. Holders of
common stock do not have cumulative voting rights, and therefore, a majority of
the outstanding shares voting at a meeting of stockholders is able to elect the
entire board of directors, and if they do so, minority stockholders would not be
able to elect any members to the board of directors. FX Energy's bylaws provide
that a majority of the issued and outstanding shares of FX Energy constitutes a
quorum for stockholders' meetings, except with respect to certain matters for
which a greater percentage quorum is required by statute.
Stockholders of FX Energy have no preemptive rights to acquire additional
shares of common stock or other securities. The common stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of FX Energy, the shares of common stock are entitled to share
equally in corporate assets after satisfaction of all liabilities and the
payment of any liquidation preferences.
Holders of common stock are entitled to receive such dividends as the board
of directors may from time to time declare out of funds legally available for
the payment of dividends. FX Energy seeks growth and expansion of its business
through the reinvestment of profits, if any, and does not anticipate that it
will pay dividends on the common stock in the foreseeable future.
As of May 17, 1999, FX Energy had reserved for issuance on exercise of
options and warrants at exercise prices ranging from $1.50 to $10.25 an
aggregate of 3,684,239 shares of common stock consisting of 2,599,584 shares
issuable on the exercise of outstanding options and warrants with a weighted
average exercise price of $4.42 per share, and 1,084,655 shares issuable on the
exercise of options previously granted but not yet exercisable at a weighted
exercise price of $6.97 per share.
The board of directors has authority to authorize the offer and sale of
additional securities without the vote of or notice to existing shareholders,
and it is likely that additional securities will be issued to provide future
financing. The issuance of additional securities could dilute the percentage
interest and per share book value of existing shareholders, including persons
purchasing common stock in this offering.
PREFERRED STOCK
Under FX Energy's Articles of Incorporation, FX Energy's board of directors
is authorized, without shareholder action, to issue preferred stock in one or
more series and to fix the number of shares and rights, preferences and
limitations of each series. Among the specific matters that may be determined
by the board of directors are the dividend rate, the redemption price, if any,
conversion rights, if any, the amount payable in the event of any voluntary
liquidation or dissolution of FX Energy and voting rights, if any.
FX Energy is authorized to issue 500,000 shares of Series A Preferred
Stock. Such preferred stock is non-redeemable and subordinate to any other
series of FX Energy's Preferred Stock which may at any time be issued (FX Energy
currently does not have any Preferred Stock outstanding). The Series A
Preferred Stock is authorized for issuance pursuant to the preferred stock
purchase rights that trade with the common stock, as described below. Each
share of Series A Preferred Stock is entitled to receive, when, as and if
declared, a dividend in an amount equal to one hundred times the cash dividend
declared on each share of common stock and one hundred times any non-cash
dividends declared with respect to each share of common stock, in like kind,
other than a dividend payable in shares of common stock. In the event of
liquidation, the holder of each share of Series A Preferred Stock shall be
entitled to receive a liquidation payment in an amount equal to one hundred
times the liquidation payment made per common share of FX Energy. Each share of
Series A Preferred Stock has one hundred votes, voting together with the common
stock and not as a separate class, unless otherwise required by law or FX
Energy's articles of incorporation. In the event of any merger, consolidation
or other transaction in which shares of common stock of FX Energy are exchanged,
each share of Series A Preferred Stock is entitled to receive one hundred times
the amount received per share of common stock of FX Energy.
Each share of common stock includes one right (a "Right") which entitles
the registered holder to purchase from FX Energy one one-hundredth (1/100) of a
share of Series A Preferred Stock at an exercise price of $100 per Right,
subject to adjustment to prevent dilution. Initially the Rights will not be
exercisable, certificates for the Rights will not be issued and, unless and
until the Rights become exercisable, they will be transferred with and only with
the shares of common stock. The Rights are exercisable on the Separation Date,
which will occur on the earlier of (i) ten calendar days following a public
announcement that certain persons or groups have acquired 20% or more of the
outstanding voting shares of FX Energy, (ii) ten calendar days following the
commencement or public announcement of the intent of any person to acquire 20%
or more of the outstanding voting shares of FX Energy; or (iii) such later date
as may be fixed by the board of directors. Following the Separation Date,
certificates representing the Rights will be mailed to holders of record of
common stock and thereafter such certificates alone will evidence the rights.
If any person acquires more than 20% of the outstanding common stock or FX
Energy engages in certain business combinations, other than pursuant to a tender
or exchange offering for all shares of common stock approved by the board of
directors, the Rights become exercisable for common stock, in lieu of Series A
Preferred Stock, by paying one-half of the exercise price of the Right for a
number of shares of common stock of FX Energy having an aggregate market price
equal to such exercise price. Any Rights that are or were beneficially owned by
a person who has acquired 20% or more of the outstanding common stock will
become void.
FX Energy may redeem the Rights at $.01 per Right at any time until ten
business days after public announcement that a person has acquired 20% or more
of the outstanding shares of common stock, provided that the redemption is
approved by FX Energy's Rights Redemption Committee, a committee consisting of
at least three continuing directors, a majority of whom are not employees of FX
Energy. The Rights will expire on the tenth anniversary after adoption of the
Rights by the board of directors unless earlier redeemed by FX Energy. Unless
the Rights have been previously redeemed, all shares of common stock issued by
FX Energy will include Rights. As long as the Rights are redeemable, the Rights
Redemption Committee, without further shareholder approval may, except with
respect to the exercise price or expiration date of the Rights, amend the Rights
in any matter that, in the opinion of the board of directors, does not
materially adversely affect the interests of holders of the Rights.
CERTAIN ARTICLE AND BYLAW PROVISIONS
FX Energy's Articles of Incorporation divide the members of the board of
directors into three classes of directors, with each class to be as nearly equal
in number of directors as possible, serving staggered, three-year terms. FX
Energy's Articles of Incorporation also provide that directors may be removed,
with or without cause, by a two-thirds majority of the shareholders at a meeting
called for that purpose and that any resulting vacancies can be filled by only a
vote of a majority of the directors remaining in office.
FX Energy's bylaws permit stockholders to nominate a person for election as
a director or bring other matters before a stockholder meeting only if written
notice of such intent is provided to FX Energy at least 30 days prior to the
meeting. Such notice of intent to nominate a person for election as a director
is required to set forth the same kind of information respecting such nominee as
would be required under the proxy rules of the SEC, including the written
consent of the nominee to serve as a director, if elected, and the name and
address of the stockholder making the nomination as well as the number of shares
of stock owned by such stockholder. In the case of other proposed business, the
notice must set forth a brief description of each matter proposed, the name and
address of the stockholder proposing the matter, the number of shares of stock
owned by such stockholder and any material interest of such stockholder in such
matter.
Nevada law provides that a merger or consolidation, sale or similar
transaction involving all or substantially all of FX Energy's assets, the
issuance of securities having an aggregate value equal to 5% or more of the
aggregate market of all outstanding shares of the corporation or the
reclassification, recapitalization or similar transaction involving an
"interested stockholder" (as defined), within three years after the stockholder
became interested, cannot be completed unless such transaction is approved by
the board of directors of FX Energy. After the expiration of three years after
a person becomes an interested stockholder, a transaction cannot be completed
with the interested stockholder unless it is approved by the board of directors
or a majority of the outstanding voting power not beneficially owned by the
interested stockholder, unless certain "fair price" provisions are met. Such
fair price provisions generally require that the amount of cash and the market
value of the consideration of the cash to be received per share by all holders
of the outstanding common stock of FX Energy not beneficially owned by the
interested stockholder be at least equal to the higher of the price per share
paid by the interested stockholder or the market value on the date of
announcement of the proposed combination. For purposes of these provisions, an
interested stockholder is one who beneficially owns, directly or indirectly, 10%
or more of the voting power of the outstanding stock of the corporation.
The foregoing provisions may tend to deter any potential unfriendly offers
or other efforts to obtain control of FX Energy that are not approved by the
board of directors and thereby deprive the stockholders of opportunities to sell
shares of common stock at prices higher than the prevailing market price. On
the other hand, these provisions may tend to assure continuity of management and
corporate policies and to induce any person seeking control of FX Energy or a
business combination with FX Energy to negotiate on terms acceptable to the then
elected board of directors.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent of FX Energy's securities is Fidelity
Transfer Corporation, 1800 South West Temple, Salt Lake City, Utah 84115,
telephone (801) 484-7222.
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares at various times in one or
more of the following transactions:
-on Nasdaq;
-in the over-the-counter market;
-in negotiated transactions other than in such markets;
-by pledge to secure debts and other obligations;
-in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions, in covering previously established short
positions and in settlement of other transactions in standardized or
-over-the-counter options; or
-in a combination of any of the above transactions.
Any such sale of common stock by the selling stockholders must be accompanied
by, or follow the delivery of, a prospectus filed with a current registration
statement relating to the common stock being offered, unless the selling
stockholder elects to rely on Rule 144 or another exemption from the
registration requirements in connection with a particular transaction. The
selling stockholders may sell their shares at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices. The selling stockholders may use broker-dealers to
sell their shares. The broker-dealers will either receive discounts or
commissions from the selling stockholders, or they will receive commissions from
purchasers of shares. FX Energy does not intend to enter into any arrangement
with any securities dealer concerning solicitation of offers to purchase the
common stock.
Under certain circumstances the selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of the Securities Act. Any commissions received by such broker-
dealers and any profits realized on the resale of shares by them may be
considered underwriting discounts and commissions under the Securities Act. The
selling stockholders may agree to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act. In addition, FX
Energy has agreed to indemnify the selling stockholders against certain
liabilities, including certain liabilities under the Securities Act.
Alternatively, FX Energy may contribute toward amounts paid due to such
liabilities.
Under the rules and regulations of the Exchange Act, any person engaged in
the distribution of the resale of shares may not simultaneously engage in market
making activities with respect to FX Energy's common stock for a period of two
business days prior to the commencement of such distribution. The selling
stockholders will also be subject to applicable provisions of the Exchange Act
and regulations under the Exchange Act which may limit the timing of purchases
and sales of shares of FX Energy's common stock by the selling stockholders.
The selling stockholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by them. The shares
offered hereby are being registered pursuant to contractual obligations of FX
Energy, and FX Energy has paid the expenses of the preparation of this
prospectus.
FX Energy estimates that it will incur costs of approximately $30,000 in
connection with this offering for legal, accounting, printing, and other costs
related to the registration and sale of the shares of common stock. The selling
stockholders will bear other separate costs incurred by them.
AVAILABLE INFORMATION
FX Energy has filed a registration statement on Form S-3 (together with all
amendments and exhibits, the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") to register the shares of common stock offered
by the selling stockholders under the Securities Act of 1933, as amended (the
"Securities Act"). This prospectus, which is a part of the Registration
Statement, does not contain certain information set forth in the Registration
Statement because SEC rules permit such omission. Statements made in this
prospectus as to the content of any contract, agreement or other document are
not necessarily complete. Some contracts, agreements, or other documents are
filed or incorporated by reference as an exhibit to the Registration Statement
or to a document incorporated by reference in this prospectus. In those cases,
investors should refer to such exhibits for more complete descriptions.
FX Energy files reports, proxy and information statements and other
information with the SEC. The public may read and copy at prescribed rates any
materials FX Energy files with the SEC, including the Registration Statement and
the exhibits thereto, at the SEC's offices at:
Public Reference Room Citicorp Center Seven World Trade Center
450 Fifth Street, N.W. 500 West Madison Street New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
For information, telephone the SEC's Public Reference Room at 1-800-SEC-0330.
The SEC Internet site at http://www.sec.gov contains materials FX Energy files
with the SEC in electronic versions through the SEC's Electronic Data Gathering,
Analysis and Retrieval system (EDGAR).
Public information is also available at: The Nasdaq Stock Market
1735 K Street, N.W.
Washington, D.C. 20006.
LEGALITY OF SECURITIES
The validity under the Nevada Revised Statutes of the common stock to be
sold by the selling stockholders has been passed on for FX Energy by Kruse,
Landa & Maycock, L.L.C.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1998 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The year end independent reserve report dated December 31, 1998,
incorporated by reference into this Prospectus by reference from FX Energy's
Annual Report on Form 10-K for the year ended December 31, 1998, has been
prepared by Larry D. Krause, Billings, Montana, as stated in his report, which
is incorporated by reference and has been so incorporated by reference in
reliance and upon such report given on the authority of that firm as experts in
oil and gas engineering.
<PAGE>
TABLE OF CONTENTS
- -----------------------------------
PAGE FX ENERGY, INC.
Information Incorporated
By Reference....................2
Risk Factors......................3
Recent Developments..............13
Capitalization...................18
No Net Proceeds To FX Energy.....18
No Dividends.....................18
Selling Stockholders.............19 1,792,500
Description Of Securities........20 SHARES OF COMMON STOCK
Plan Of Distribution.............23
Availability Of Information......24
Legality Of Securities...........24
Experts..........................24
Investors should rely on the
information contained in this
prospectus. FX Energy has not
authorized anyone to provide
different information. This PROSPECTUS
Prospectus does not constitute an
offer to sell or the solicitation of
an offer to buy any securities
covered by this Prospectus in any MAY 28, 1999
state or other jurisdiction to any
person to whom it is unlawful to make
such offer or solicitation in such
state or jurisdiction.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
- -------------------------------------------------------------------------------
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses in connection with the
distribution of the securities being registered:
SEC registration fee............................... $ 3,270
Legal fees......................................... 20,000
Accounting fees and expenses....................... 4,000
Printing expenses.................................. 1,000
Courier, reproduction, and miscellaneous........... 1,730
--------
Total $ 30,000
========
All expenses, except the SEC fees, are estimates.
The Selling Shareholder will not bear any portion of the foregoing
expenses, but will pay fees in connection with the sale of the common stock
offered hereby in those transactions completed to or through securities broker
and/or dealers in the form of markups, markdowns, or commissions.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.037 and 78.751 of the Nevada Revised Statutes and "ARTICLE VII.
INDEMNIFICATION OF DIRECTORS AND OFFICERS" of the Registrant's articles of
incorporation provide for indemnification of the Registrant's directors and
officers and the limitation of liability thereon in a variety of circumstances,
which may include liabilities under the Securities Act of 1933, as amended.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons pursuant to the
foregoing provisions, the Registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is contrary to
public policy as expressed in the Securities Act and, therefore, is
unenforceable. (See "ITEM 17. UNDERTAKINGS.")
ITEM 16. EXHIBITS
The following documents are included as exhibits to this Registration
Statement, pursuant to item 601 of regulation S-K.
EXHIBIT SEC
NUMBER REFERENCE
NUMBER TITLE OF DOCUMENT LOCATION
- ------- --------- ------------------------------------ ---------
ITEM 3. ARTICLES OF INCORPORATION AND BYLAWS
- ------------------------------------------------------
3.1 3 Restated and Amended Articles of Incorporated
Incorporation by
Reference(1)
3.2 3 Bylaws Incorporated by
Reference(2)
ITEM 4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS
- ------------------------------------------------------
4.1 4 Specimen Stock Certificate Incorporated
by
Reference(2)
4.2 4 Form of Designation of Rights, Privileges, Incorporated
and Preferences of Series A Preferred Stock by
Reference(3)
4.3 4 Form of Rights Agreement dated as of April Incorporated by
4, 1997, between FX Energy and Fidelity Reference(3)
Transfer Corp.
ITEM 5. OPINION RE: LEGALITY
- ------------------------------------------------------
5.1 Opinion of Kruse, Landa & Maycock, LLC This Filing
ITEM 21. SUBSIDIARIES OF THE REGISTRANT
- ------------------------------------------------------
21.1 Schedule of Subsidiaries Incorporated by
Reference (15)
ITEM 23. CONSENTS OF EXPERTS AND COUNSEL
- ------------------------------------------------------
23.1 23 Consent of PricewaterhouseCoopers LLP, This Filing
independent accountants
23.2 23 Consent of Larry D. Krause, Petroleum This Filing
Engineer
23.3 23 Consent of Kruse, Landa & Maycock, LLC, Included in
exhibit 5.1
ITEM 24. POWER OF ATTORNEY
- ------------------------------------------------------
24.1 Power of Attorney Signature Page
(1) Incorporated by reference from the proxy statement respecting the 1997
annual meeting of shareholders.
(2) Incorporated by reference from the registration statement on Form SB-2, SEC
File No. 33-88354-D.
(3) Incorporated by reference from the report on Form 8-K dated April 4, 1997.
ITEM 17. UNDERTAKINGS
RULE 415 OFFERINGS: POST-EFFECTIVE AMENDMENTS. [Regulation S-K, Item 512(a)]
The undersigned Registrant will:
(1) File, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new Registration Statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE [Regulation
S-K, Item 512(b)]
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
INCORPORATED ANNUAL AND QUARTERLY REPORTS [Regulation S-K, Item 512(e)]
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide interim financial information required to
be presented Article 3 of Regulation S-X.
INDEMNIFICATION. [Regulation S-K, Item 512(h)]
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange COMMISSION such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer, or controlling person of the small business issuer
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Salt Lake City, state of Utah, on the 27th day of May
1999.
FX ENERGY, INC.
(Registrant)
By /s/ David N. Pierce
David N. Pierce, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David N. Pierce and Andrew W. Pierce, and each of
them, with power of substitution, as his attorney-in-fact for him, in all
capacities, to sign any amendments to this Registration Statement and to file
the same with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact or his substitutes may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
indicated and on the 27th day of May 1999.
/s/ David N. Pierce
David N. Pierce, Director and
President
(Principal Executive and Financial
Officer)
/s/ Andrew W. Pierce
Andrew W. Pierce, Director
(Principal Operations Officer)
Jerzy B. Maciolek, Director
/s/ Thomas B. Lovejoy
Thomas B. Lovejoy, Director
Peter Raven, Director
Jay W. Decker, Director
/s/ Scott J. Duncan
Scott J. Duncan, Director and
Secretary
/s/ Dennis L. Tatum
Dennis L. Tatum
Treasurer (Principal Accounting
Officer)
KRUSE, LANDA & MAYCOCK, L.L.C.
EIGHTH FLOOR, BANK ONE TOWER
50 WEST BROADWAY (300 SOUTH)
SALT LAKE CITY, UTAH 84101-2034
TELEPHONE: (801) 531-7090
ATTORNEYS AT LAW TELECOPY: (801) 359-3954
(801) 531-9892
May 27, 1999
Board of Directors
FX Energy, Inc.
3006 Highland Drive, Suite 206
Salt Lake City, Utah 84106
Re: FX Energy, Inc.
Registration Statement on Form S-3
Gentlemen:
We have been engaged by FX Energy, Inc. (the "Company") to render our
opinion respecting the legality of certain securities to be offered and sold
pursuant to the registration statement on form S-3 being filed by the Company
with the Securities and Exchange Commission (the "Registration Statement").
Capitalized terms used but not defined herein have the same meanings as set
forth in the Registration Statement.
In connection with this engagement, we have examined the following:
1. Articles of incorporation of the Company;
2. Bylaws of the Company;
3. The Registration Statement; and
4. Unanimous consents of the Company's board of directors.
We have examined such other corporate records and documents and have made
such other examination as we deemed relevant.
Based upon the above examination, we are of the opinion that the Common
Stock to be sold by selling stockholders identified in the Registration
Statement will be, when sold in accordance with the terms set forth in the
Registration Statement, legally issued, fully paid, and nonassessable under the
Nevada Revised Statutes, as amended.
This firm consents to being named in the Prospectus included in the
Registration Statement as having rendered the foregoing opinion and as having
represented the Company in connection with the Registration Statement.
Sincerely,
/s/ KRUSE, LANDA & MAYCOCK, L.L.C.
KL&M/RCT
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our report dated February 26 , 1999, relating to the financial
statements, which appear in FX Energy, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1998. We also consent to the references to us under the
heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
/s/
Salt Lake City, Utah
May 28, 1999
CONSENT OF PETROLEUM ENGINEERING CONSULTANT
I hereby consent to (i) the incorporation by reference into the registration
statement on Form S-3 of FX Energy, Inc. (the "Company") of my report as of
January 19, 1999, respecting the estimated oil reserve information for the
Montana and Nevada producing properties of the Company, as such report is
referred to in the Company's annual report on form 10-K for its fiscal year
ended December 31, 1998; and (ii) the reference to me under the heading
"Experts" in such Registration Statement.
/s/ LARRY D. KRAUSE
Billings, Montana
May 25, 1999
