Registration No. 333-40480
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Post-Effective Amendment No. 3
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
FX ENERGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
NEVADA 1311 87-0504461
------ ---- ----------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation or Classification Number)
organization) Code Number)
3006 Highland Drive
Suite 206
Salt Lake City, Utah 84106
(801) 486-5555
(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
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
James R. Kruse
Kevin C. Timken
Kruse, Landa & Maycock, LLC
50 West Broadway
8th Floor
Salt Lake City, UT 84101
(801) 531-7090
fax: (801) 531-7091
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this registration statement.
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, please 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, 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, 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(d) 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, please check the following box: [ ]
The Registrant hereby amends this amendment to the registration
statement on such date or dates as may be necessary to delay its effective date
until the Registrant files a further amendment which specifically states that
this amendment to the registration statement will thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, or until the
amendment to the registration statement becomes effective on such date as the
Securities and Exchange Commission acting pursuant to Section 8(a) may
determine.
<PAGE>
Post-Effective Amendment No. 3 to Prospectus dated July 10, 2000
FX ENERGY, INC.
--------------------------------------------------------------------------------
This post-effective amendment is a part of and should be read in
conjunction with our prospectus dated July 10, 2000.
--------------------------------------------------------------------------------
This post-effective amendment no. 3 updates our prospectus dated July
10, 2000, as amended August 14, 2000. This amendment includes an updated
discussion about our activities. It also includes financial information as of
September 30, 2000, and for the three and nine-month periods then ended.
Table of Contents Page
Activity Update.............................................. 2
Consolidated Balance Sheets (unaudited)...................... 10
Consolidated Statements of Operations (unaudited)............ 12
Consolidated Statements of Cash Flows (unaudited)............ 13
Notes to Consolidated Financial Statements (unaudited)....... 14
Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 18
This is a cumulative post-effective amendment that consolidates in this
document all previous post-effective amendments and supplements. Please consider
the information in this amendment together with the prospectus dated July 10,
2000.
The date of this post-effective amendment is November [__], 2000.
<PAGE>
ACTIVITY UPDATE
Company Overview
FX Energy is an independent oil and natural gas company focused on
exploration, development and production opportunities in the Republic of Poland.
With the help of our partners, we were the first western company to make an
onshore commercial natural gas discovery in Poland. We hold rights to more oil
and natural gas exploration acreage in Poland than any other western company.
Our ongoing activities are conducted through strategic alliances with the Polish
Oil and Gas Company, or POGC, and/or Apache Corporation. These alliances allow
us to utilize the operating and technical personnel of those companies, gain
access to geological and geophysical data, manage our exploration risk and
obtain other necessary support in Poland.
Business Strategy
We have modified our business strategy significantly this year to
capitalize on our participation with POGC in the Fences project area. The
principal components of our business strategy are:
o Apply Technical and Financial Leverage. POGC has developed
exploration models based on 3-D seismic, which have been
refined since the mid-1990s for use in the Rotliegendes and
Reef trends in western Poland. We are using these models to
explore and develop our Fences project area without incurring
the cost of developing those models. In addition, we believe
the Fences project is well suited to debt funding.
Accordingly, we are seeking to put in place a credit facility
to fund the majority of development costs in the Fences
project area.
o Reduce our Exploration Risk Profile. Historically, we have
managed exploration risk by limiting capital exposure. Now, we
are managing our exploration risk by focusing on known
producing trends. The Fences project area represents a
relatively lower risk drilling opportunity because of its
production history and because we are able to use exploration
models developed by POGC for this area.
o Focus on Poland. We believe Poland is attractive because of
its known productive basins, their limited oil and natural gas
exploration and development and Poland's heavy dependence on
oil and natural gas imports. Poland's industrial
infrastructure and fiscal regime favorable to foreign
investment reinforce the attractiveness of Poland.
Operations Overview
Our principal exploration and development activities are with POGC in
the Permian Basin of western Poland. In and near the Fences project area, POGC
has developed and refined two exploration models: one that we have used
successfully in the Rotliegendes trend
2
<PAGE>
associated with the Poznan Depression and another that POGC has used
successfully in the Reef trend associated with the Wolsztyn Block. POGC has
developed six natural gas fields in the Reef trend immediately west of the
Fences project area with aggregate estimated recoverable natural gas reserves of
approximately 800 Bcf, as estimated by POGC. In addition, POGC has developed
four natural gas fields in the Rotliegendes trend in or near the Fences project
area with aggregate estimated recoverable natural gas reserves of more than 500
Bcf, as estimated by POGC. We will apply these two exploration models to test
several 3-D seismic-defined structures on those portions of the Rotliegendes and
Reef trends located in the Fences project area.
The Kleka 11, our first well in the Fences project area, discovered the
Kleka East reservoir and brings the number of fields in the Rotliegendes trend
to five. The Kleka 11 well tested at a calculated gross open flow rate of 34.3
MMcf of natural gas per day from a reservoir in the Rotliegendes trend at a
depth of approximately 3,000 meters. We and POGC currently are negotiating
contracts for the sale of natural gas and are acquiring rights-of-way for the
five-kilometer pipeline connection to the Radlin field processing facility owned
and operated by POGC.
In the Fences project area we plan to acquire approximately 300 square
kilometers of 3-D seismic data and drill 13 wells, including the just-completed
Kleka 11, through the first half of 2002. We estimate the cost of such
activities to be approximately $44.5 million gross ($30.0 million net). Under
this plan, we have already successfully completed the Kleka 11 well (August
2000) and started drilling the Mieszkow well (September 2000). We have also
completed field acquisition on 200 square kilometers of 3-D seismic (October
2000). We will need additional debt and equity capital to fully fund our planned
exploration and development activities for 2001 and 2002.
We also conduct oil and natural gas exploration activities with Apache
in other areas of Poland. Under the Apache Exploration Program, we completed
seismic acquisition in the Pomeranian project area in northwestern Poland and
began drilling the Tuchola 108-2 in October 2000. This well is expected to test
an approximately 15,000 acre feature with Devonian and Permian objectives. In
the Warsaw West project area in central Poland, the first test well on the
Annopol 254-1 prospect is also scheduled to begin drilling later this year. In
addition to carrying 100% of the cost of drilling these two wells, Apache is
required to bear our costs to drill one additional well and acquire, process and
interpret approximately 340 kilometers of seismic data.
3
<PAGE>
The following table sets forth the details of our current exploration
and development plan. Apache is required to pay our share of costs for planned
activities under the Apache Exploration Program. The capital expenditure
estimates included in the table are based on information currently available to
us and are subject to revision as we believe warranted. The amount and timing of
actual capital expenditures may vary significantly from the table below,
depending on various factors, including the ability to complete financing.
<TABLE>
<CAPTION>
Capital Expenditures
Anticipated ------------------------------------
Commencement Gross Net FX Share
--------------------- ----------------- ------------------
(in thousands)
2000
Fences Project(1)
<S> <C> <C> <C>
Kleka 11 Well.......................................... Drilled $ 2,500 $ 2,500
Mieszkow Well (exploratory)............................ Commenced 2,500 2,500
Donatowo 3-D seismic................................... Processing 2,000 2,000
Zaniemysl 3-D seismic.................................. Processing 2,000 2,000
Apache Exploration Program
Tuchola 108-2 well (Pomeranian exploratory)(2)......... Commenced $ 3,500 $ --
Annopol 254-1 well (Warsaw West exploratory)(3)........ 4Q2000 3,500 --
2001
Fences Project (subject to planned funding)
Donatowo well (exploratory)............................ 2001 $ 2,500 $ 2,500
Zaniemysl well (exploratory)........................... 2001 2,500 2,500
Boguszyn well (exploratory)............................ 2001 2,500 2,245
Lugi 3-D seismic....................................... 2001 2,000 980
Lugi well (exploratory)................................ 2001 2,500 1,225
Seven development wells, as warranted.................. 2001 17,500 8,575
Facilities and flowlines............................... 2001 6,000 2,940
Apache Exploration Program
Unspecified well (exploratory)......................... 2001 $ 3,500 $ --
2-D seismic (340 kilometers)........................... 2001 3,500 --
</TABLE>
(1) Under our agreement with POGC, we must spend the first $16.0 million of
exploration expenditures in the Fences project area to earn a 49%
working interest and a 46% net revenue interest, assuming the current
base royalty rate of 6%. By year-end 2000, we expect to have spent
approximately $9.0 million under this agreement.
(2) We have a 42.5% working interest and a 39.95% net revenue interest,
assuming the current base royalty rate of 6%.
(3) We have a 50% working interest and a 47% net revenue interest, assuming
the current base royalty rate of 6%.
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<PAGE>
The Fences
Our principal exploration and development activities are in the Fences
project area with POGC. The Fences project area consists of approximately
300,000 gross acres in a region of west central Poland encompassing significant
portions of two gas-producing trends. The following description of POGC's prior
activity in the Rotliegendes trend associated with the Poznan Depression and in
the Reef trend associated with the Wolsztyn Block indicates the success POGC has
had with exploration models that we are now using.
The Reef Trend
In the Reef trend, POGC has discovered natural gas in six reef
structures in a 35-kilometer stretch along the Wolsztyn Block immediately west
of the Fences project area. These POGC fields consist of Koscian, Rensko,
Bonikowo, Wielichowo, Ruchocice, and Racot. When drilling on 3-D seismic data in
this Reef trend, every reef prospect POGC has drilled has contained
hydrocarbons, and 24 of 27 wells (89%) have been completed for production. We
believe this success rate is attributable to specific 3-D processing techniques
that POGC has developed to identify areas of probable porosity within the reefs.
The Reef trend runs approximately 45 kilometers inside the Fences project area
before continuing to the southeast.
In the Reef trend, we have completed field acquisition on a 100 square
kilometer 3-D seismic grid in the Donatowo area in the westernmost portion of
the Fences project area. This 3-D seismic grid covers several Reef buildups
identified by 2-D seismic data acquired by POGC. We intend to finish processing
and interpreting this 3-D seismic and select a site for the first test well,
which we expect to drill in the first half of 2001. As funding permits, we will
acquire additional 3-D seismic along the Wolsztyn Block in the Fences project
area, seeking additional Reef prospects.
The Rotliegendes Trend
In the Rotliegendes trend associated with the Poznan Depression, POGC
has discovered four fields: Kaleje, Kleka, Radlin, and Jarocin. Our recent Kleka
East discovery brings the number of fields in this trend to five. The
Rotliegendes trend continues for approximately 45 kilometers within the Fences
project area. Extensive drilling by POGC shows that reservoir quality is
relatively uniform throughout the Rotliegendes trend. All structural traps
drilled by POGC to date contain gas accumulations, with the size of the
accumulation generally proportionate to the size of the structure. During the
last two years, POGC has acquired 3-D seismic over the entire trend within the
Fences project area, except for a gap of approximately 100 square kilometers
over the Zaniemysl structures, where we have just completed field acquisition of
new 3-D seismic data.
Our first structural target in the Fences project area was Kleka East,
a 3-D defined Rotliegendes prospect approximately two kilometers southeast of
POGC's three well Kleka field.
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<PAGE>
Our Kleka 11 well tested at a calculated gross open flow rate of 34.3 MMcf of
natural gas per day from a depth of approximately 3,000 meters. We are
permitting a pipeline to deliver natural gas produced from the Kleka East field
approximately five kilometers to existing processing facilities that serve the
Radlin field. We are also negotiating a natural gas sales contract. We expect
first production from the Kleka 11 by late 2000, with first revenue in early
2001.
In August 2000, we started drilling the Mieszkow well, approximately
five kilometers northwest of Kleka. Intermediate casing has been set to a depth
of 2,400 meters, and drilling is now continuing to a projected total depth of
about 3,000 meters. We have also completed field acquisition for the
approximately 100 square kilometer Zaniemysl prospect 3-D seismic study.
2000-2001 Exploration and Development Plans
Under our April 2000 agreement with POGC, we expect to earn a 49%
working interest in the Fences project area by spending $16.0 million on
exploration activities. After we complete our commitment, POGC will bear a 51%
share of costs. POGC is the operator of the Fences project area.
As of September 30, 2000, we had spent $5.6 million toward satisfaction
of this commitment, and expect to have spent approximately $9.0 million by
year-end 2000. Our operating plan for the Fences project area consists of
acquiring approximately 300 square kilometers of 3-D seismic data and drilling
13 wells, including the recently completed Kleka 11, at a total cost of
approximately $44.5 million gross ($30.0 million net), which we plan to fund
primarily with a combination of debt and equity financing. In the Rotliegendes
trend, we have already successfully completed the Kleka 11 well (August 2000)
and started drilling the Mieszkow well (September 2000). We have also completed
field acquisition on 100 square kilometers of 3-D seismic on the Donatowo grid
in the Reef trend and on 100 square kilometers of 3-D seismic on the Zaniemysl
grid in the Rotliegendes trend. We plan to drill both the Donatowo and the
Zaniemysl leads in the first half of 2001. We believe the results of our Kleka
11 well, the nature of our plan of development and the data provided by POGC on
its nearby producing fields will support debt and equity funding for our
proposed development, and subject to such funding, we plan to carry out this
program.
Apache Exploration Program
Since 1997, we have carried on significant exploration activities in
Poland with Apache, a leading independent exploration and production company
with extensive operations in the United States, Canada, Australia, Egypt, Poland
and China. Our agreements with Apache establish an area of mutual interest
covering our current and future holdings throughout the entire country of
Poland, except for the 300,000 gross acre Fences project area and our 900,000
gross acre Baltic project area. The area of mutual interest covers oil and
natural gas exploration, production, development and acquisition activities
through December 2000, or completion of Apache's exploratory well commitment,
whichever comes later. To date, Apache has paid our share of costs to drill an
equivalent of seven exploratory wells and is committed to covering our share of
costs to drill three additional wells in Poland. Of these seven wells, all
drilled in the Lublin project area, one, the Wilga 2, was an exploration
success; the other six were dry holes.
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<PAGE>
With Apache, we completed a seismic acquisition program in the
Pomeranian project area in northwestern Poland and, in October 2000, began
drilling the first well, the Tuchola 108-2, on a 15,000 acre feature with
Permian and Devonian objectives. The first test well on the Annopol 254-1
prospect in the Warsaw West project area in central Poland is also scheduled for
later this year. In addition to carrying the cost of drilling these two wells,
Apache is required to bear our costs to drill one more well and acquire, process
and interpret approximately 340 kilometers of seismic data.
Pomeranian Project Area
The 3.5 million acre Pomeranian project area is located in northwestern
Poland and consists of exploration rights on 2.2 million gross acres held by us
and Apache and options on 1.3 million gross acres controlled by POGC. We and
Apache have an option to participate, with up to a one-third interest each, in
the exploration of the POGC option acreage. In turn, POGC has the option to
participate in the exploration of the acreage we and Apache hold, with up to a
one-third interest, by participating in the first exploratory well on each
250,000 acre block. The Pomeranian project area lies along the under-explored
northern edge of the Permian trend in northwestern Poland. Although POGC has
made a few, mostly small oil and natural gas discoveries in this region, there
has been relatively little exploration and no significant oil and natural gas
production to date. Geologic survey test wells drilled by the Polish government
have oil and natural gas shows. POGC has made available to us and Apache the
existing seismic data and well logs and cores from the Pomeranian project area
for reprocessing and analysis. We believe portions of the Pomeranian project
area may be geologically similar to the trends we are testing in the Fences
project area.
Since 1997, we and Apache have reprocessed existing seismic data and
reviewed logs and cores made available by POGC. This study resulted in a number
of exploration leads on which we gathered approximately 300 kilometers of
additional 2-D seismic data in early 2000. We have identified and evaluated
several prospects. In October 2000, we began drilling the first test well, the
Tuchola 108-2, to test an approximately 15,000 acre feature with Devonian and
Permian objectives. Apache will pay our share of the cost of this well to casing
point.
Warsaw West Project Area
The 2.9 million acre Warsaw West project area is located adjacent to
the northwest section of our Lublin project area west of the Wilga project area
in central Poland and consists of exploration rights on 2.9 million gross acres
held by us and Apache. POGC has no option to participate in the Warsaw West
project area. There has been no oil or natural gas production from the Warsaw
West project area. We and Apache have recently completed gathering approximately
422 kilometers of 2-D seismic data and plan to drill one exploratory well on the
Annopol 254-1 prospect, beginning in the fourth quarter of 2000, to test a large
feature with Permian and Carboniferous objectives. Under terms of the Apache
Exploration Program, Apache will pay our share of costs in the first exploratory
well.
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<PAGE>
Lublin Project Area/Wilga Project Area
The Wilga project area is located in the northwest portion of the
Lublin project area. The 5.6 million-acre Lublin project area in central
southeast Poland consists of exploration rights on approximately 5.0 million
gross acres held by us and Apache and options to participate in 600,000 acres
controlled by POGC. We and Apache have an option to participate, with up to a
one-third interest each, in the exploration of the POGC option acreage. In turn,
POGC has the option to participate in the exploration of the acreage that we and
Apache hold, with up to a one-third interest, by participating in the first
exploratory well on each 250,000 acre block. In the Wilga project area, POGC
elected to participate with a 10% interest, and we and Apache each have a 45%
interest.
The first four exploratory wells under the Apache Exploration Program,
all drilled within the Lublin project area south and east of the Wilga project
area during 1999, were nonproductive. In accordance with the terms of the Apache
Exploration Program, Apache covered all of our share of costs for all four
wells. The fifth well, the Wilga 2, was an exploratory success. Initial
production tests indicated a combined gross flow rate of 16.9 MMcf of natural
gas and 570 Bbls of condensate per day from the Carboniferous at a depth of
approximately 2,800 meters. The Wilga 2 well was followed by the Wilga 3 and 4,
which were determined to be dry holes. We and Apache are currently considering
whether to conduct an extended flow test on the Wilga 2 to assess the potential
financial return from further expenditures. Under the terms of our agreement
with Apache and POGC, any party has the right to propose that certain activities
be undertaken, elect to participate in activities proposed by others or elect
not to participate. If a party elects not to participate in specific activities,
the other parties nevertheless have the right to proceed.
Carpathian Project Area
The 2.9 million acre Carpathian project area is located in southern
Poland and comprises exploration rights on 1.4 million gross acres held by us
and Apache and options on 1.5 million gross acres controlled by POGC. We and
Apache have an option to participate, with up to a one-third interest each, in
the exploration of the POGC option acreage. Further, POGC has the option to
participate in the exploration of the acreage that we and Apache own, with up to
a one-third interest, by participating in the first exploratory well on each
250,000 acre block.
Oil and natural gas were first discovered in the Carpathian area in
1854. A limited number of deep wells drilled in recent years by POGC evidence
additional possible reservoir potential within the area. Over the past few
years, there have been several new oil and natural gas discoveries in the
Carpathian region. Potential producing horizons within the Carpathian are
Jurassic, Miocene, Cretaceous and Devonian.
During 1999, we elected to participate with a 5% interest in drilling
the Andrychow 6, an exploratory well operated by POGC on its option acreage in
southern Poland. The well tested a Devonian formation and was determined to be a
dry hole during December 1999.
During the second quarter of 1999, we and Apache commenced testing and
recompletion operations on the Lachowice Farm-in, an undeveloped natural gas
discovery on a POGC
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<PAGE>
concession located within the Carpathian project area. Under terms of the
agreement, we and Apache agreed to pay the costs of testing three shut-in wells
and, if warranted, additional wells and production infrastructure in order to
earn a one-third interest each in the project. The test results from this
project did not warrant constructing gathering and processing facilities. On May
4, 2000, we and Apache turned the project back to POGC and terminated the
Lachowice Farm-in.
We and Apache have identified several new leads in the Carpathian
project area based on reprocessed existing seismic data. Under terms of the
Apache Exploration Program, Apache is required to pay our share of costs of the
first well and approximately 340 kilometers of 2-D seismic data.
9
<PAGE>
<TABLE>
<CAPTION>
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September December
30, 2000 31, 1999
------------------- -------------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents........................................ $ 1,232,063 $ 1,619,237
Investment in marketable debt securities......................... 4,027,106 5,249,003
Accounts receivable:
Accrued oil sales........................................... 311,367 243,183
Interest receivable......................................... 100,042 86,723
Joint interest owners and others............................ 138,284 171,242
Advances to oil and gas ventures................................. 1,593,614 --
Inventory........................................................ 87,684 66,361
Other current assets............................................. 186,361 126,006
------------------- -------------------
Total current assets................................... 7,676,521 7,561,755
------------------- -------------------
Property and equipment, at cost:
Oil and gas properties (successful efforts method):
Proved...................................................... 4,273,294 1,687,089
Unproved.................................................... 1,399,852 1,382,880
Other property and equipment..................................... 3,237,768 2,652,102
------------------- -------------------
Gross property and equipment.......................... 8,910,914 5,722,071
Less accumulated depreciation, depletion and amortization........ (3,363,502) (3,173,493)
------------------- -------------------
Net property and equipment............................ 5,547,412 2,548,578
------------------- -------------------
Other assets:
Certificates of deposit ......................................... 356,500 356,500
Other............................................................ 2,789 2,789
------------------- -------------------
Total other assets..................................... 359,289 359,289
------------------- -------------------
Total assets.......................................................... $ 13,583,222 $ 10,469,622
=================== ===================
</TABLE>
-- Continued --
The accompanying notes are an integral part of the consolidated
financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
-- Continued --
September December
30, 2000 31, 1999
-------------------- --------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Accounts payable............................................. $ 1,209,794 $ 623,911
Accrued liabilities.......................................... 1,097,875 1,478,862
-------------------- --------------------
Total current liabilities............................... 2,307,669 2,102,773
-------------------- --------------------
Commitments (Note 8)
Stockholders' equity:
Common stock, $.001 par value, 100,000,000 and 30,000,000
shares authorized as of September 30, 2000 and December 31,
1999, respectively; 17,849,075 and 14,849,003 shares issued
and outstanding as of September 30, 2000 and December
31, 1999, respectively..................................... 17,849 14,849
Notes and interest receivable from officers.................. (765,659) (1,370,873)
Deferred compensation from stock option
modifications.............................................. (1,304,978) --
Additional paid-in capital................................... 49,381,427 38,480,556
Accumulated deficit.......................................... (36,053,086) (28,757,683)
-------------------- --------------------
Total stockholders' equity.............................. 11,275,553 8,366,849
-------------------- --------------------
Total liabilities and stockholders' equity........................ $ 13,583,222 $ 10,469,622
==================== ====================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended For the nine months ended
September 30, September 30,
------------------------------ -------------------------------
2000 1999 2000 1999
-------------- -------------- --------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Oil sales..................................... $ 664,261 $ 451,917 $ 1,874,038 $ 1,045,669
Contract servicing........................... 586,586 410,540 972,517 589,337
-------------- -------------- --------------- --------------
Total revenues......................... 1,250,847 862,457 2,846,555 1,635,006
-------------- -------------- --------------- --------------
Operating costs and expenses:
Lease operating expenses...................... 285,350 216,822 822,319 631,459
Production taxes.............................. 79,565 12,031 96,112 50,722
Geological and geophysical costs.............. 1,323,581 364,145 2,488,473 704,971
Exploratory dry hole costs.................... 969,461 580,000 1,898,220 612,859
Impairment of unproved oil and gas properties. -- -- 674,158 --
Contract servicing costs..................... 440,039 249,311 774,468 382,697
Depreciation, depletion and amortization...... 94,607 116,353 275,954 368,742
General and administrative costs.............. 609,187 551,430 2,010,667 1,830,377
Apache Poland general and administrative costs 558,057 -- 558,057 --
Amortization of deferred compensation [G&A]... 260,995 -- 260,995 --
-------------- -------------- --------------- --------------
Total operating costs and expenses..... 4,620,842 2,090,092 9,859,423 4,581,827
-------------- -------------- --------------- --------------
Operating loss..................................... (3,369,995) (1,227,635) (7,012,868) (2,946,821)
-------------- -------------- --------------- --------------
Other income (expense):
Interest and other income..................... 179,024 155,215 428,625 362,649
Impairment of notes receivable from officers.. (597,035) -- (711,160) --
-------------- -------------- --------------- --------------
Total other income (expense)........... (418,011) 155,215 (282,535) 362,649
-------------- -------------- --------------- --------------
Net loss........................................... $ (3,788,006) $ (1,072,420) $ (7,295,403) $ (2,584,172)
============== ============== =============== ==============
Basic and diluted net loss per common share........ $ (0.21) $ (0.08) $ (0.46) $ (0.18)
============== ============== =============== ==============
Basic and diluted weighted average number
of shares outstanding.......................... 17,838,803 14,847,916 15,950,475 13,979,582
============== ============== =============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended
September 30,
-------------------------------------
2000 1999
------------------ -----------------
Cash flows from operating activities:
<S> <C> <C>
Net loss............................................................ $ (7,295,403) $ (2,584,172)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation, depletion and amortization.................... 275,954 368,742
Exploratory dry hole costs.................................. -- 128,922
Impairment of unproved oil and gas properties............... 674,158 --
Impairment of notes receivable from officers............... 711,160 --
Interest on officer loans................................... (105,947) (98,366)
Amortization of deferred compensation....................... 260,995 --
Increase (decrease) from changes in:
Accounts receivable............................................. (48,545) (99,587)
Advances to oil and gas ventures................................ (1,593,614) (52,414)
Inventory....................................................... (21,323) 1,515
Other current assets............................................ (60,355) (84,964)
Accounts payable and accrued liabilities........................ 204,897 (752,642)
------------------ -----------------
Net cash used in operating activities...................... (6,998,023) (3,172,966)
------------------ -----------------
Cash flows from investing activities:
Additions to oil and gas properties................................. (3,277,335) (390,086)
Additions to other property and equipment........................... (671,611) (76,672)
Additions to other assets........................................... -- (2,789)
Proceeds from sale of property interests............................ -- 6,000
Purchase of marketable debt securities.............................. (5,113,103) (6,138,711)
Proceeds from maturing marketable debt securities................... 6,335,000 3,157,000
------------------ -----------------
Net cash used in investing activities........................... (2,727,049) (3,445,258)
------------------ -----------------
Cash flows from financing activities:
Advances to officers................................................ -- (597,563)
Proceeds from sale of common stock (net of offering costs).......... 9,272,454 7,053,553
Proceeds from exercise of warrants and options...................... 65,444 13,250
------------------ -----------------
Net cash provided by financing activities...................... 9,337,898 6,469,240
------------------ -----------------
Decrease in cash and cash equivalents.................................... (387,174) (148,984)
Cash and cash equivalents at beginning of period......................... 1,619,237 1,811,780
------------------ -----------------
Cash and cash equivalents at end of period............................... $ 1,232,063 $ 1,662,796
================== =================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
13
<PAGE>
FX ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of Presentation
The interim financial data are unaudited; however, in the opinion of
the management of FX Energy, Inc. and Subsidiaries ("FX Energy" or the
"Company"), the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results for the
interim periods. The interim financial statements should be read in conjunction
with FX Energy's quarterly report on Form 10-Q for the three months ended March
31, 2000, the quarterly report on Form 10-Q for the six months ended June 30,
2000, and the annual report on Form 10-K for the year ended December 31, 1999,
including the financial statements and notes thereto.
The consolidated financial statements include the accounts of FX
Energy, its wholly-owned subsidiaries and its undivided interests in Poland and
the United States. All significant inter-company accounts and transactions have
been eliminated in consolidation. At September 30, 2000, FX Energy owned 100% of
the voting stock of all of its subsidiaries.
Note 2: Income Taxes
FX Energy recognized no income tax benefit from the losses generated in
the first nine months of 2000 and the first nine months of 1999.
Note 3: Officer Loans
As of September 30, 2000, notes receivable and accrued interest from
officers, before an impairment allowance, totaled $2,142,331, with a due date of
on or before December 31, 2000. The notes receivable and accrued interest are
collateralized by 233,340 shares of FX Energy's common stock. In accordance with
"Accounting by Creditors for Impairment of a Loan," or SFAS 114, FX Energy has
recorded a cumulative impairment allowance of $1,376,673 as of September 30,
2000, including $711,160 for the nine months ended September 30, 2000, based on
the value of the underlying collateral.
In consideration for extending the term from December 31, 1999 through
December 31, 2000, the officers agreed that if the average closing price of the
common stock for five consecutive trading days results in a value of the
collateral equal to or above the total principal and accrued interest balances,
the officers will repay the loans within 45 days thereafter either in cash or by
tendering to the Company such number of shares which at the average closing
price for the previous five consecutive trading days equals the principal and
accrued interest then due.
The impairment allowance will continue to be adjusted quarterly based
on the market value of the collateral shares until the officer loans are deemed
paid in full.
Note 4: Net Loss Per Share
Basic earnings per share is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
is computed by dividing the net loss by the sum of the weighted average number
of common shares and the effect of dilutive unexercised stock options and
warrants and convertible preferred stock. Options and warrants to purchase
4,135,667 shares of
14
<PAGE>
common stock at prices ranging from $1.50 to $10.25 per share with a weighted
average of $5.26 per share were outstanding at September 30, 2000. Options and
warrants to purchase 3,692,572 shares of common stock at prices ranging from
$1.50 to $10.25 per share with a weighted average price of $5.17 per share were
outstanding at September 30, 1999. No options or warrants were included in the
computation of diluted earnings per share for the periods ended September 30,
2000 and 1999, because the effect would have been antidilutive.
Note 5: Business Segments
FX Energy operates within two segments of the oil and gas industry: the
exploration and production segment ("E&P") and the contract servicing segment.
Mining, which consisted solely of gold exploration on FX Energy's Sudety Project
Area in Poland, has been discontinued and is not considered a reportable
business segment by FX Energy. Identifiable net property and equipment are
reported by business segment for management and segment reporting purposes.
Current assets, current liabilities and other assets are not allocated to
business segments for management or segment reporting purposes.
Reportable business segment information for the three months ended
September 30, 2000, nine months ended September 30, 2000 and as of September 30,
2000 follows:
<TABLE>
<CAPTION>
Reportable Segments
------------------------------- Non-
Contract Segmented
E&P Servicing Items Total
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Three months ended September 30, 2000:
Revenues................. $ 664,261 $ 586,586 $ -- $ 1,250,847
Net profit or (loss) (1). (2,571,180) 84,506 (1,301,332) (3,788,006)
Nine months ended September 30, 2000:
Revenues................. 1,874,038 972,517 -- 2,846,555
Net loss (2)............. (4,716,752) 27,992 (2,606,643) (7,295,403)
As of September 30, 2000:
Identifiable net property
and equipment (3)..... 4,426,777 988,610 132,025 5,547,412
</TABLE>
(1) Non-segmented items include $13,139 of corporate DD&A, $609,187 of
general and administrative costs, $260,995 of amortization of deferred
compensation, $179,024 of other income and an officer loan impairment
of $597,035.
(2) Non-segmented items include $52,446 of corporate DD&A, $2,010,667 of
general and administrative costs, $260,995 of amortization of deferred
compensation, $428,625 of other income and an officer loan impairment
of $711,160.
(3) Non-segmented items include $132,025 of corporate office equipment,
hardware and software.
15
<PAGE>
Reportable business segment information for the three months ended
September 30, 1999, nine months ended September 30, 1999 and as of September 30,
1999 follows:
<TABLE>
<CAPTION>
Reportable Segments
------------------------------- Non- Non-
Contract Reportable Segmented
E&P Servicing Segments Items Total
--------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Three months ended September 30, 1999:
Revenues................. $ 451,917 $ 410,540 $ -- $ -- $ 862,457
Net profit or (loss) (1). (721,408) 80,296 (11,571) (419,737) (1,072,420)
Nine months ended September 30, 1999:
Revenues................. 1,045,669 589,337 -- -- 1,635,006
Net loss (2)............. (963,059) (36,164) (31,355) (1,553,594) (2,584,172)
As of September 30, 1999:
Identifiable net property
and equipment (3)..... 2,116,829 549,169 -- 176,772 2,842,770
</TABLE>
(1) Non-segmented items include $23,522 of corporate DD&A, $551,430 of
general and administrative costs, and $155,215 of other income.
(2) Non-segmented items include $85,866 of corporate DD&A, $1,830,377 of
general and administrative costs and $362,649 of other income.
(3) Non-segmented items include $176,772 of corporate office equipment,
hardware and software.
Note 6: Supplemental Non-Cash Activity Disclosure
Non-Cash Investing Activities
During the nine months ended September 30, 1999, additions to oil and
gas properties included $131,500 of unproved property additions financed by
accrued liabilities.
Note 7: Private Placement of Securities
During June 2000, FX Energy completed a private placement of 2,969,000
shares of common stock that resulted in net proceeds of $9,272,454 ($10,391,500
gross). The proceeds from this placement have been used to partially fund
current planned ongoing exploration and development activities in Poland and for
other general corporate purposes.
Note 8: Fences Project Area
On April 11, 2000, FX Energy signed an agreement with the Polish Oil
and Gas Company ("POGC") under which FX Energy will earn a 49% working interest
in approximately 300,000 gross acres in west central Poland (the "Fences"
project area) by spending $16.0 million for agreed drilling, seismic acquisition
and other related activities.
On June 28, 2000, FX Energy announced that the Kleka 11, the first
exploratory well drilled in the Fences project area, was an exploratory success
after the well tested a calculated open flow rate of 34.3 MMcf of gas per day
from a Rotliegendes sandstone reservoir. The next exploratory well, the Mieszkow
1, commenced drilling during September 2000.
During the third quarter of 2000, FX Energy paid $5,573,931 to POGC
under this agreement, leaving a remaining commitment of $10,426,069.
16
<PAGE>
Note 9: Deferred Compensation
On August 4, 2000, FX Energy extended the term of 678,000 options that
were to expire during 2000 for a period of two years, with a one-year vesting
period. The extended options include 500,000 options held by officers of FX
Energy, 78,000 options held by other employees of FX Energy and 100,000 options
held by a consultant to FX Energy. In accordance with "Accounting for Certain
Transactions Involving Stock Compensation" or FIN 44, FX Energy recognized
deferred compensation of $1,566,000, including $1,188,000 covering the intrinsic
value applicable to officers and employees and $378,000 covering the fair market
value calculated using the Black Scholes model for consultants. The calculation
was based on the date the options were extended and the deferred compensation
will be amortized to expense over the one-year vesting period.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Information May Prove Inaccurate
This report contains 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. FX Energy
intends the forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 27A of the
Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934.
Readers of this report are cautioned that 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 of events and
involve risks and uncertainties, such as:
o the future results of drilling individual wells and other
exploration and development activities;
o uncertainties regarding drilling potential and expected
results;
o the availability of required additional capital and the terms
on which it can be obtained;
o the inability to estimate precisely the hydrocarbon potential
of any exploration prospect or the related risks;
o future variations in well performance as compared to initial
test data;
o future events that may result in the need for additional
capital;
o fluctuations in prices for oil and gas;
o uncertainties of certain terms to be determined in the future
relating to FX Energy's oil and gas interests, including
exploitation fees, royalty rates and other matters;
o future drilling and other exploration schedules and sequences
for various wells and other activities;
o uncertainties regarding estimates of hydrocarbon reserves,
production rates, accumulations and recoveries;
o uncertainties regarding future political, economic,
regulatory, fiscal, taxation and other policies in Poland;
o the future ability of FX Energy to attract strategic partners
to share the costs of exploration, exploitation, development
and acquisition activities; and
o future plans and the financial and technical resources of
strategic partners.
The forward-looking information is 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 from those now assumed or
anticipated. Actual events or results may differ materially from those discussed
in the forward-looking statements. The forward-
18
<PAGE>
looking statements included in this report are made only as of the date of this
report. FX Energy is not obligated to update such forward-looking statements to
reflect subsequent events or circumstances.
Introduction
FX Energy is an independent energy company engaged in the exploration,
development and production of oil and gas from properties located primarily in
the Republic of Poland. To date, all of FX Energy's production has been from its
United States producing properties. In the western United States, FX Energy
produces oil from fields in Montana and Nevada and has a drilling and well
servicing company in northern Montana and oil and gas exploration prospects in
several western states.
FX Energy conducts substantially all of its exploration and development
activities jointly with others and, accordingly, recorded amounts for FX
Energy's activities in Poland reflect only FX Energy's proportionate interest in
these activities.
FX Energy's results of operations may vary significantly from period to
period based on the factors discussed above and on other factors such as FX
Energy's exploratory and development drilling success. Therefore, the results of
any one period may not be indicative of future results.
FX Energy follows the successful efforts method of accounting for its
oil and gas properties. Under this method of accounting, all property
acquisition costs and costs of exploratory and development wells are capitalized
when incurred, pending determination of whether the well has found proved
reserves. If an exploratory well has not found proved reserves, these costs plus
the costs of drilling the well are expensed. The costs of development wells are
capitalized, whether productive or nonproductive. Geological and geophysical
costs on exploratory prospects and the costs of carrying and retaining unproved
properties are expensed as incurred. An impairment allowance is provided to the
extent that capitalized costs of unproved properties, on a property-by-property
basis, are considered not to be realizable. An impairment loss is recorded if
the net capitalized costs of proved oil and gas properties exceed the aggregate
undiscounted future net revenues determined on a property-by-property basis. The
impairment loss recognized equals the excess of net capitalized costs over the
related fair value, determined on a property-by-property basis. As a result of
the foregoing, FX Energy's results of operations for any particular period may
not be indicative of the results that could be expected over longer periods.
FX Energy has reviewed all recently issued, but not yet adopted,
accounting standards in order to determine their effects, if any, on its results
of operations or financial position. Based on that review, FX Energy believes
that none of these pronouncements will have a significant effect on current or
future earnings or operations.
19
<PAGE>
Results of Operations by Business Segment
FX Energy operates within two segments of the oil and gas industry: the
exploration and production segment and the contract servicing segment. Mining,
which consisted solely of gold exploration on FX Energy's Sudety Project Area in
Poland, has been discontinued and is excluded from the following discussion.
Depreciation, depletion and amortization costs ("DD&A") and general and
administrative costs ("G&A") directly associated with their respective segments
are detailed within the following discussion. Amortization of deferred
compensation, interest income, other income and officer loan impairment are not
allocated to individual operating segments for management or segment reporting
purposes and are discussed in their entirety following the segment discussion.
Comparison of the third quarter of 2000 to the third quarter of 1999
E&P - Oil and Gas Segment
A summary of the percentage change in oil revenues, average oil prices,
production volumes and lifting costs per barrel for the third quarters of 2000
and 1999, as compared to their respective prior year's period, is set forth in
the following table:
<TABLE>
<CAPTION>
Quarter ended September 30,
--------------------------------------
2000 1999
------------------ ------------------
<S> <C> <C>
Oil revenues................................................. $ 664,000 $ 452,000
Percent change versus prior year's quarter................. +47% +64%
Average oil price............................................ $ 27.60 $ 18.02
Percent change versus prior year's quarter................. +53% +93%
Production volumes (Bbls).................................... 24,069 25,075
Percent change versus prior year's quarter................. -4% -15%
Lifting cost per barrel...................................... $ 11.86 $ 8.65
Percent change versus prior year's quarter................. +37% +11%
</TABLE>
Oil Revenues. Oil revenues were $664,000 during the third quarter of
2000, an increase of $212,000, as compared to $452,000 during the same period of
1999. During the third quarters of 2000 and 1999, FX Energy's oil revenues were
positively affected by increased oil prices and negatively affected by lower
production rates attributable to the natural production declines of FX Energy's
producing properties.
Lease Operating Costs. FX Energy's lease operating costs are composed
of normal recurring lease operating expenses ("LOE") and production taxes. Lease
operating costs were $365,000 during the third quarter of 2000, an increase of
$136,000, as compared to $229,000 during the same period of 1999. A comparative
discussion of each component of lease operating costs incurred during the third
quarters of 2000 and 1999 follows:
LOE was $285,000 during the third quarter of 2000, an increase of
$68,000, as compared to $217,000 during the same period of 1999. During the
third quarter of 2000, FX Energy
20
<PAGE>
plugged and abandoned ten inactive wells on the Cut Bank Sand Unit, its
principal producing property, at a net cost of approximately $92,000. During the
third quarter of 1999, FX Energy deferred workovers and reduced its LOE by
utilizing a redesigned pattern of injecting fluids into the Cut Bank Sand Unit,
which was initiated during the first quarter of 1999.
Production taxes were $80,000 during the third quarter of 2000, an
increase of $68,000, as compared to $12,000 during the same period of 1999.
During 1999, the state of Montana passed legislation to reduce the production
tax rate to as low as 0.5% for stripper oil wells. The legislation also included
a provision whereby the production tax rate would increase to as much as 12.8%
for stripper wells if the average price of west Texas intermediate crude oil
("WTI") exceeded $30 per barrel during any calendar quarter. In the event the
price of WTI exceeded $30 per barrel, the higher tax rate would apply to all
production during the then-current calendar quarter. During the third quarter of
2000, WTI exceeded $30 per barrel, resulting in substantially higher production
taxes during the third quarter of 2000, as compared to the same period of 1999.
During the third quarters of 2000 and 1999, production taxes averaged
approximately 11.98% and 0.03% of oil revenues, respectively.
Exploration Costs. FX Energy's exploration costs consist of geological
and geophysical costs ("G&G"), exploratory dry holes and nonproducing leasehold
impairments. Exploration costs were $2,293,000 during the third quarter of 2000,
an increase of $1,349,000, as compared to $944,000 during the same period of
1999. Exploration costs include $12,000 of G&G costs relating to gold
exploration in Poland incurred during the third quarter of 1999, which are
excluded from the following discussion of each component of exploration costs:
G&G costs were $1,324,000 during the third quarter of 2000, an increase
of $972,000, as compared to $352,000 during the same period of 1999. During the
third quarter of 2000, FX Energy spent $1,050,000 on acquiring 3-D seismic data
on two separate areas within its Fences project area in western Poland. During
the third quarter of 1999, FX Energy's G&G costs were primarily covered by
Apache Corporation ("Apache") in accordance with the Apache Exploration Program
terms, except for the Pomeranian and Warsaw West project areas, where FX Energy
spent $140,000 and $97,000, respectively, primarily on reprocessing 2-D seismic
data. G&G costs will continue to fluctuate from period to period, based on FX
Energy's level of exploratory activity in Poland and the respective cost
participation percentage of FX Energy's industry partners.
Exploratory dry hole costs were $969,000 during the third quarter of
2000, an increase of $389,000, as compared to $580,000 during the same period of
1999. During the third quarter of 2000, FX Energy drilled the Wilga 4 on the
Lublin Basin project area, which subsequently was determined to be an
exploratory dry hole on August 31, 2000, at a cost of approximately $838,000.
Also, during the third quarter of 2000, FX Energy incurred $131,000 of
additional costs associated with the Wilga 3 well, an exploratory dry hole
drilled on the Lublin Basin project area during the second quarter of 2000.
During the third quarter of 1999, FX Energy wrote off $580,000 of costs
associated with reentering the Stryszawa 2K well in the Lachowice area of
southern Poland after the well did not obtain a commercial production rate.
21
<PAGE>
There were no nonproducing leasehold impairments during the third
quarters of 2000 and 1999. As of September 30, 2000, FX Energy had capitalized
unproved property costs of $1,400,000, including $18,000 domestically and
$1,382,000 in Poland. Nonproducing leasehold impairments will vary from period
to period based on FX Energy's determination that capitalized costs of unproved
properties, on a property-by-property basis, are not realizable.
DD&A Expense - E&P. DD&A expense for producing properties was $20,000
for the third quarter of 2000, an increase of $8,000, as compared to $12,000
during the same period of 1999. The DD&A rate per barrel for the third quarter
of 2000 was $0.81, an increase of $0.34, as compared to $0.47 during the same
period of 1999. The DD&A rate increase for the third quarter of 2000, as
compared to the same period of 1999, was due principally to a 29% reduction in
estimated proved reserves as of December 31, 1999, as compared to December 31,
1998.
Apache Poland G&A Costs. Apache Poland G&A costs consist of FX Energy's
share of direct overhead costs incurred by Apache in Poland in accordance with
terms of the Apache Exploration Program. Apache Poland G&A costs were $558,000
during the third quarter of 2000, as compared to no Apache Poland G&A costs
during the same period of 1999. Prior to July 1, 2000, Apache covered all of FX
Energy's pro rata share of Apache Poland G&A costs. Effective July 1, 2000, FX
Energy began paying approximately 35% of Apache Poland G&A costs, to be adjusted
as each of Apache's remaining drilling requirements are completed, up to a
maximum of 50%. The annual budgeted amount of Apache Poland G&A costs is subject
to advance joint approval by FX Energy and Apache.
Contract Servicing
Contract Servicing Revenues. Contract servicing revenues were $587,000
during the third quarter of 2000, an increase of $176,000, as compared to
$411,000 during the same period of 1999. The increase in revenue during the
third quarter of 2000, as compared to the same period of 1999, was primarily due
to improved market conditions as a result of higher oil prices. During the third
quarters of 2000 and 1999, FX Energy's contract servicing segment generated
gross profit before depreciation of $147,000 and $162,000, respectively.
Contract servicing revenues will continue to fluctuate period to period based on
market conditions, the degree of emphasis on utilizing equipment on Company
owned properties and other factors.
Contract Servicing Costs. Contract servicing costs were $440,000 during
the third quarter of 2000, an increase of $191,000, as compared to $249,000 for
the same period of 1999. In general, contract servicing costs are directly
related to contract servicing revenues. During the third quarters of 2000 and
1999, contract servicing costs were 75% and 61%, respectively, of contract
servicing revenues. Contract servicing costs will continue to fluctuate period
to period based on the contract servicing revenues generated, market conditions,
degree of emphasis on utilizing equipment on Company owned properties and other
factors.
DD&A Expense - Contract Servicing. DD&A expense for contract servicing
was $62,000 during the third quarter of 2000, a decrease of $18,000, as compared
to $80,000 during
22
<PAGE>
the same period of 1999, primarily due to capital items being depreciated during
the third quarter of 1999 subsequently becoming fully depreciated prior to or
during the third quarter of 2000.
Nonsegmented Information
DD&A Expense - Corporate. DD&A expense for corporate activities was
$13,000 during the third quarter of 2000, a decrease of $11,000, as compared to
$24,000 during the same period of 1999. The decrease during the third quarter of
2000, as compared to the same period of 1999, is primarily the result of office
equipment, furniture and software being depreciated during the third quarter of
1999 subsequently becoming fully depreciated prior to or during the third
quarter of 2000.
G&A Costs. G&A costs were $609,000 during the third quarter of 2000, an
increase of $58,000, as compared to $551,000 for the same period of 1999. During
the third quarter of 2000, FX Energy incurred more domestic G&A costs relating
to expanding its presence in Poland, as compared to the same period of 1999. G&A
costs are expected to continue at current or higher levels, with fluctuations
from period to period primarily due to the level of FX Energy's activities in
Poland.
Amortization of Deferred Compensation. Amortization of deferred
compensation was $261,000 for the third quarter of 2000, as compared to no
amortization of deferred compensation during the same period of 1999. On August
4, 2000, FX Energy extended the term of 678,000 options that were to expire
during 2000 for a period of two years, with a one-year vesting period. In
accordance with FIN 44, FX Energy will incur deferred compensation cost of
$1,566,000, including $1,188,000 covering the intrinsic value applicable to
officers and employees and $378,000 covering the fair market value calculated
using the Black Scholes model for consultants, amortized to expense over the
one-year vesting period.
Interest and Other Income. Interest and other income was $179,000
during the third quarter of 2000, an increase of $24,000, as compared to
$155,000 during the same period of 1999. FX Energy's cash and marketable debt
securities average balances during the third quarter of 2000 were slightly
higher, as compared to the same period of 1999. As a result, interest income was
$179,000 during the third quarter of 2000, an increase of $26,000, as compared
to $153,000 during the same period of 1999.
Officer Loan Impairment. Officer loan impairment was $597,000 for the
third quarter of 2000, as compared to no officer loan impairment for the same
period of 1999. In accordance with SFAS 114, FX Energy recorded an officer loan
impairment of $597,000 for the third quarter of 2000. The book value of the
notes receivable from officers totaled $766,000 as of September 30, 2000,
representing principal and interest of $2,142,000 reduced by a cumulative
impairment allowance of $1,376,000. The notes receivable from officers are
collateralized by 233,340 shares of FX Energy's common stock. The impairment
allowance will continue to be adjusted quarterly based on the market value of
the collateral shares.
23
<PAGE>
Comparison of the first nine months of 2000 to the first nine months of
1999
E&P - Oil and Gas Segment
A summary of the percentage change in oil revenues, average oil prices,
production volumes and lifting costs per barrel for the first nine months of
2000 and 1999, as compared to their respective prior year's period, is set forth
in the following table:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------------------
2000 1999
--------------------- ---------------------
<S> <C> <C>
Oil revenues................................................. $ 1,874,000 $ 1,046,000
Percent change versus prior year's first nine months....... +79% +19%
Average oil price............................................ $ 25.79 $ 13.59
Percent change versus prior year's first nine months....... +90% +33%
Production volumes (Bbls).................................... 72,662 76,970
Percent change versus prior year's first nine months....... -6% -11%
Lifting costs per barrel..................................... $ 11.32 $ 8.20
Percent change versus prior year's first nine months....... +38% -3%
</TABLE>
Oil Revenues. Oil revenues were $1,874,000 during the first nine months
of 2000, an increase of $828,000, as compared to $1,046,000 during the same
period of 1999. During the first nine months of 2000 and 1999, FX Energy's oil
revenues were positively affected by increased oil prices and negatively
affected by lower production rates attributable to the natural production
declines of FX Energy's producing properties.
Lease Operating Costs. Lease operating costs were $918,000 during the
first nine months of 2000, an increase of $236,000, as compared to $682,000
during the same period of 1999. A comparative discussion of each component of
lease operating costs incurred during the first nine months of 2000 and 1999
follows:
LOE was $822,000 during the first nine months of 2000, an increase of
$191,000, as compared to $631,000 during the same period of 1999. During the
first nine months of 2000, FX Energy incurred substantially more workover,
maintenance and repair costs as it completed work that had been postponed due to
low oil prices during 1999. Also, during the first nine months of 2000, FX
Energy plugged and abandoned ten inactive wells on the Cut Bank Sand Unit.
During the first nine months of 1999, FX Energy deferred workovers and
redesigned the pattern of injecting fluids into the Cut Bank Sand Unit in an
effort to reduce its operating costs.
Production taxes were $96,000 during the first nine months of 2000, an
increase of $45,000, as compared to $51,000 during the same period of 1999.
During 1999, the state of
24
<PAGE>
Montana passed legislation to reduce the production tax rate to as low as 0.5%
for stripper oil wells. The legislation also included a provision whereby the
production tax rate would increase to as much as 12.8% for stripper wells if the
average price of WTI exceeded $30 per barrel during any calendar quarter. In the
event the price of WTI exceeded $30 per barrel, the higher tax rate would apply
to all production during the then-current calendar quarter. During the third
quarter of 2000, WTI exceeded $30 per barrel, resulting in a higher effective
production tax rate during the first nine months of 2000, as compared to the
same period of 1999. During the first nine months of 2000 and 1999, production
taxes averaged approximately 5.1% and 4.9% of oil revenues, respectively.
Exploration Costs. Exploration costs were $5,061,000 during the first
nine months of 2000, an increase of $3,743,000, as compared to $1,318,000 during
the same period of 1999. Exploration costs include $31,000 of G&G costs relating
to gold exploration in Poland incurred during the first nine months of 1999,
which are excluded from the following discussion of each component of
exploration costs:
G&G costs were $2,488,000 during the first nine months of 2000, an
increase of $1,814,000, as compared to $674,000 during the same period of 1999.
During the first nine months of 2000, FX Energy spent $1,050,000 on acquiring
3-D seismic data on two separate areas within the Fences project area and
$1,078,000 on acquiring and processing 2-D seismic data on areas within FX
Energy's Area of Mutual Interest with Apache in Poland. During the first nine
months of 1999, FX Energy's G&G costs were primarily covered by Apache in
accordance with the Apache Exploration Program terms, except for the Pomeranian
and Warsaw West project areas, where FX Energy spent $168,000 and $97,000,
respectively, primarily on reprocessing 2-D seismic data. G&G costs will
continue to fluctuate from period to period, based on FX Energy's level of
exploratory activity in Poland and the respective cost participation percentage
of FX Energy's industry partners.
Exploratory dry hole costs were $1,898,000 during the first nine months
of 2000, an increase of $1,285,000, as compared to $613,000 during the first
nine months of 1999. During the first nine months of 2000, FX Energy drilled the
Wilga 3 and Wilga 4 wells, both of which were subsequently determined to be
exploratory dry holes at a cost of $1,060,000 and $838,000, respectively. During
the first nine months of 1999, FX Energy wrote off $580,000 relating to the cost
of reentering the Stryszawa 2K in the Lachowice area after the well did not
obtain a commercial production rate and incurred $33,000 of additional costs
relating to the Gladysze 1A, an exploratory dry hole drilled in Poland on the
Baltic project area during 1997.
Nonproducing leasehold impairments were $674,000 during the first nine
months of 2000, as compared to no nonproducing leasehold impairments during
1999. During the first nine months of 2000, FX Energy wrote off $674,000 of
nonproducing leasehold costs relating to the Williston Basin in North Dakota,
where it has no further exploration plans. As of September 30, 2000, FX Energy
had capitalized unproved property costs of $1,400,000, including $18,000
domestically and $1,382,000 in Poland. Nonproducing leasehold impairments will
continue to vary from period to period based on FX Energy's determination that
capitalized costs of unproved properties, on a property-by-property basis, are
not realizable.
25
<PAGE>
DD&A Expense - E&P. DD&A expense for producing properties was $54,000
for the first nine months of 2000, an increase of $14,000, as compared to
$40,000 during the same period of 1999. The DD&A rate per barrel for the first
nine months of 2000 was $0.74, an increase of $0.22, as compared to $0.52 during
the same period of 1999. The DD&A rate increase for the first nine months of
2000, as compared to the same period of 1999, was due principally to a 29%
reduction in estimated proved reserves as of December 31, 1999, as compared to
December 31, 1998.
Apache Poland G&A Costs. Apache Poland G&A costs were $558,000 during
the first nine months of 2000, as compared to no Apache Poland G&A costs during
the same period of 1999. Prior to July 1, 2000, Apache covered all of FX
Energy's pro rata share of Apache Poland G&A costs. Effective July 1, 2000, FX
Energy began paying approximately 35% of Apache Poland G&A costs, to be adjusted
as each of Apache's remaining drilling requirements are completed, up to a
maximum of 50%. The annual budgeted amount of Apache Poland G&A costs is subject
to advance joint approval by FX Energy and Apache.
Contract Services - Oil and Gas Segment
Contract Servicing Revenues. Contract servicing revenues were $973,000
during the first nine months of 2000, an increase of $384,000, as compared to
$589,000 during the first nine months of 1999. The increase in revenue during
the first nine months of 2000, as compared to the same period of 1999, was
primarily due to improved market conditions as a result of higher oil prices.
During the first nine months of 2000 and 1999, FX Energy's contract servicing
segment generated gross profit before depreciation of $198,000 and $207,000,
respectively. Contract servicing revenues will continue to fluctuate period to
period based on market conditions, the degree of emphasis on utilizing equipment
on Company owned properties and other factors.
Contract Servicing Costs. Contract servicing costs were $774,000 during
the first nine months of 2000, an increase of $391,000, as compared to $383,000
for the same period of 1999. In general, contract servicing costs are directly
related to contract servicing revenues. During the first nine months of 2000 and
1999, contract servicing costs were 80% and 65%, respectively, of contract
servicing revenues. Contract servicing costs will continue to fluctuate period
to period based on the contract servicing revenues generated, market conditions,
degree of emphasis on utilizing equipment on company-owned properties and other
factors.
DD&A Expense - Contract Servicing. DD&A expense for contract servicing
was $170,000 during the first nine months of 2000, a decrease of $73,000, as
compared to $243,000 during the same period of 1999, primarily due to capital
items being depreciated during the first nine months of 1999 subsequently
becoming fully depreciated prior to or during the first nine months of 2000.
26
<PAGE>
Nonsegmented Information
DD&A Expense - Corporate. DD&A expense for corporate activities was
$52,000 during the first nine months of 2000, a decrease of $34,000, as compared
to $86,000 during the same period of 1999. The decrease during the first nine
months of 2000, as compared to the same period of 1999, is primarily the result
of office equipment, furniture and software being depreciated during the first
nine months of 1999 subsequently becoming fully depreciated prior to or during
the first nine months of 2000.
G&A Costs. G&A costs were $2,011,000 during the first nine months of
2000, an increase of $181,000, as compared to $1,830,000 for the same period of
1999. During the first nine months of 2000, FX Energy incurred more domestic G&A
costs relating to expanding its presence in Poland, as compared to the same
period of 1999. G&A costs are expected to continue at current or higher levels,
with fluctuations from period to period primarily due to the level of FX
Energy's activities in Poland.
Amortization of Deferred Compensation. Amortization of deferred
compensation was $261,000 for the first nine months of 2000, as compared to no
amortization of deferred compensation during the same period of 1999. On August
4, 2000, FX Energy extended the term of 678,000 options that were to expire
during 2000 for a period of two years, with a one-year vesting period. In
accordance with FIN 44, FX Energy will incur deferred compensation cost of
$1,566,000, including $1,188,000 covering the intrinsic value applicable to
officers and employees and $378,000 covering the fair market value calculated
using the Black Scholes model for consultants, amortized to expense over the
one-year vesting period.
Interest and Other Income. Interest and other income was $429,000
during the first nine months of 2000, an increase of $66,000, as compared to
$363,000 during the same period of 1999. FX Energy's average cash and marketable
debt securities balances were slightly higher during the first nine months of
2000, as compared to the same period of 1999. As a result, FX Energy earned
$421,000 of interest income during the first nine months of 2000, an increase of
$62,000, as compared to $359,000 for the same period of 1999. Interest and other
income will continue to fluctuate from period to period, primarily due to the
average cash and marketable debt securities balances.
Officer Loan Impairment. Officer loan impairment was $711,000 for the
first nine months of 2000, as compared to no officer loan impairment for the
same period of 1999. In accordance with SFAS 114, FX Energy recorded an officer
loan impairment of $711,000 for the first nine months of 2000. The book value of
the notes receivable from officers totaled $766,000 as of September 30, 2000,
representing principal and interest of $2,142,000 reduced by a cumulative
impairment allowance of $1,376,000. The notes receivable from officers are
collateralized by 233,340 shares of FX Energy's common stock. The impairment
allowance will continue to be adjusted quarterly based on the market value of
the collateral shares.
27
<PAGE>
Financial Condition
Working Capital. FX Energy's working capital was $5,369,000 as of
September 30, 2000, a decrease of $90,000, as compared to $5,459,000 at December
31, 1999. During the first nine months of 2000, FX Energy received net cash from
financing activities of $9,338,000, which was offset by $6,998,000 of cash used
in operating activities and $2,727,000 of cash used in investing activities, as
set forth in the following discussion:
Operating Activities. Net cash used in operating activities was
$6,998,000 during the first nine months of 2000, an increase of $3,285,000, as
compared to $3,173,000 for the same period of 1999. During the first nine months
of 2000, FX Energy had a net loss after noncash operating adjustments of
$5,479,000 and incurred negative net working capital changes of $1,519,000.
During the first nine months of 1999, FX Energy had a net loss after operating
adjustments of $2,185,000 and incurred negative net working capital changes of
$988,000.
Investing Activities. Net cash used in investing activities was
$2,727,000 during the first nine months of 2000, a decrease of $718,000, as
compared to $3,445,000 for the same period of 1999. During the first nine months
of 2000, FX Energy spent $2,429,000 to drill the Kleka 11, $157,000 on upgrading
its producing properties, $691,000 on unproved properties, $646,000 on upgrading
and acquiring additional contract servicing equipment and $26,000 on
miscellaneous assets. Also, during the first nine months of 2000, FX Energy
spent $5,113,000 on acquiring marketable debt securities and received $6,335,000
from maturing marketable debt securities. During the first nine months of 1999,
FX Energy spent $78,000 on upgrading its producing properties, a net amount of
$305,000 on unproved properties, $63,000 on upgrading its drilling well
servicing equipment and $17,000 on miscellaneous assets. Also, during the first
nine months of 1999, FX Energy spent $6,139,000 on acquiring marketable debt
securities and received $3,157,000 from maturing marketable debt securities.
Financing Activities. Net cash provided by financing activities was
$9,338,000 during the first nine months of 2000, an increase of $2,869,000, as
compared to $6,469,000 for the same period of 1999. During the first nine months
of 2000, FX Energy realized net proceeds after offering costs of $9,272,000 from
the sale of 2,969,000 shares of FX Energy's common stock and $65,000 from the
exercise of options and warrants to purchase 31,072 shares of FX Energy's common
stock. During the first nine months of 1999, FX Energy advanced two of its
officers a total of $598,000, realized net proceeds after offering costs of
$7,054,000 from the sale of 1,792,500 shares of FX Energy's common stock and
$13,000 from the exercise of options to purchase 2,000 shares of FX Energy's
common stock.
Capital Requirements
As of September 30, 2000, FX Energy had approximately $5.3 million of
cash, cash equivalents and marketable debt securities with no long-term debt. FX
Energy believes this amount will be sufficient to cover its present minimum
exploration and operating commitments through 2000 and into 2001. In order to
fully fund its current planned exploration and development activities beyond
early 2001, FX Energy will need additional debt or equity capital.
28
<PAGE>
FX Energy has ongoing discussions with a commercial lender and gas
purchasers for possible project funding related to its Kleka 11 discovery and
possible other future discoveries. If FX Energy is not able to obtain such
funding, it may need additional capital from the sale of additional securities,
possible new strategic alliances or other sources to fund the balance of its
capital expenditure budget for the Fences project area and other planned
activities. FX Energy may have to defer expenditures if funds are not available
from any source or may accept terms that may dilute the interest of our existing
stockholders or our interest in the specific project financed.
Fences Project Area. FX Energy has agreed to spend $16.0 million of
exploration and development costs on the Fences project area to earn a 49%
interest. To date, FX Energy has paid approximately $5.6 million of this
commitment, including $2.4 million to drill the Kleka 11, a $1.0 million advance
to commence drilling the Mieszkow 1 and $2.2 million to commence two separate
3-D seismic surveys. FX Energy expects to pay an additional $3.4 million of its
commitment by year-end 2000. After FX Energy completes its $16.0 million
commitment, POGC will begin bearing its 51% share of further costs.
FX Energy expects to utilize any net revenue it receives from the
development of its Kleka 11 discovery and other future discoveries in the Fences
project area to supplement its capital from other sources to further explore and
develop the Fences project area.
Apache Exploration Program. During the remainder of 2000 and early
2001, FX Energy expects to have substantially all of its share of exploration
activities relating to the Apache Exploration Program paid for by Apache. Apache
is required to cover FX Energy's share of costs to drill three exploratory wells
and to acquire approximately 340 kilometers of 2-D seismic data.
On October 23, 2000, Apache commenced drilling the Tuchola 108-2, an
exploratory well on the Pomeranian project area in northwest Poland in which FX
Energy has a 42.5% working interest. Before the end of 2000, Apache plans to
commence drilling the Annopol 254-1, an exploratory well on the West Warsaw
project area in central Poland in which FX Energy has a 50% working interest.
During 2001, Apache plans to drill an additional exploratory well in a yet to be
determined location in Poland. Apache will cover FX Energy's share of costs for
all three of the aforementioned exploratory wells.
FX Energy is evaluating its Wilga project area with Apache and POGC.
Under the terms of FX Energy's agreement with Apache and POGC, any party has the
right to propose that certain activities be undertaken, elect to participate in
activities proposed by others or elect not to participate. If a party elects not
to participate in specific activities, the other parties nevertheless have the
right to proceed.
Other. If FX Energy has the opportunity to participate in additional
appraisal, development or exploration projects with POGC, it may be required to
obtain additional capital. FX Energy expects to incur minimal exploration
expenditures on its Baltic project area in Poland during the remainder of 2000
and 2001. Similarly, FX Energy expects to incur minimal exploration, appraisal
and development expenditures on its domestic operations during the remainder of
2000 and 2001.
29
<PAGE>
FX Energy may change the allocation of capital among the categories of
anticipated expenditures depending upon future events that it cannot predict.
For example, FX Energy may change the allocation of its expenditures based on
the actual results and costs of future exploration, appraisal, development,
production, property acquisition and other activities. In addition, FX Energy
may have to change its anticipated expenditures if costs of placing any
particular discovery into production are higher, if the field is smaller or if
the commencement of production takes longer than expected.
FX Energy may obtain funds for future capital investments from the sale
of additional securities, project financing, sale of partial property interests,
strategic alliances with other energy or financial partners or other
arrangements, all of which may dilute the interest of its existing stockholders
or its interest in the specific project financed.
30
<PAGE>
PART II
Information Not Required in Prospectus
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
------------ -------------- ---------------------------------------------------------------- -------------------
<S> <C> <C> <C>
Item 3. Articles of Incorporation and Bylaws
--------------------------------------------------------------------------------------------
3.1 3 Restated and Amended Articles of Incorporation Incorporated by
Reference(24)
3.2 3 Bylaws Incorporated by
Reference(1)
Item 4. Instruments Defining the Rights of Security Holders
--------------------------------------------------------------------------------------------
4.1 4 Specimen Stock Certificate Incorporated by
Reference(1)
4.2 4 Form of Designation of Rights, Privileges, and Preferences of Incorporated by
Series A Preferred Stock Reference(14)
4.3 4 Form of Rights Agreement dated as of April 4, 1997, between FX Incorporated by
Energy and Fidelity Transfer Corp. Reference(14)
Item 5. Opinion re: Legality
--------------------------------------------------------------------------------------------
5.1 5 Opinion of Kruse, Landa & Maycock, LLC Initial Filing
Item 10. Material Contracts
--------------------------------------------------------------------------------------------
10.1 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and Frontier Poland Exploration and Reference(3)
Producing Company, Sp. z o.o. dated August 22, 1995,
relating to Blocks 51, 52, 71, 72, 91, 92, 93, 111, 112,
and 113 (Baltic)
10.2 10 Amendment No. 1 to Mining Usufruct Agreement dated August 15, Incorporated by
1996 (Baltic) Reference(4)
10.3 10 Amendment No. 2 to Mining Usufruct Agreement dated August 22, Incorporated by
1996 (Baltic) Reference (15)
10.4 10 Form of concession dated December 20, 1995, relating to Baltic Incorporated by
Concessions granted pursuant to the Mining Usufruct Reference(5)
Agreement dated August 15, 1996, with related schedule
10.5 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and Lubex Petroleum Company Sp. z o.o. Reference(10)
dated December 20, 1996, relating to concession blocks
255, 275, 295, 316, 336, 337, and 338 (Lublin)
10.6 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and Apache Poland Sp. z o.o. and FX Reference(12)
Energy Poland Sp. z o.o. (East), commercial partnership
dated October 14, 1997, related to concession blocks 257,
258, 277, 278, 297, 317, and 318 (Lublin)
10.7 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and Apache Poland Sp. z o.o. and FX Reference(12)
Energy Poland Sp. z o.o. (East), commercial partnership
dated October 14, 1997, related to concession block 298
(Lublin)
II-1
<PAGE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
------------ -------------- ---------------------------------------------------------------- -------------------
<S> <C> <C> <C>
10.8 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and Apache Poland Sp. z o.o. and FX Reference(12)
Energy Poland Sp. z o.o. (East), commercial partnership
dated October 14, 1997, related to concession blocks 319,
320, 339, 340, 340A, 359, 360, 360A, 379, 380, and 380A
(Lublin)
10.9 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and Gasex Production Company Sp. z o.o. Reference(12)
and Company, commercial partnership dated October 14,
1997, related to concession blocks 410, 411, 412, 413,
414, 415, 430, 431, 432, 433, 452 and 453 (Western
Carpathian)
10.10 10 Mining Usufruct Agreement between the State Treasury of the Incorporated by
Republic of Poland and FX Energy Poland Sp. z o.o. and Reference(12)
Partners, commercial partnership dated October 30, 1997,
related to concession blocks 85, 86, 87, 88, 89, 105,108,
109, 129, and 149, in northwestern Poland (Pomeranian)
10.11 10 Option Agreement dated July 18, 1997, between Polish Oil and Incorporated by
Gas Company, FX Energy, and Apache Overseas, Inc. Reference(12)
10.12 10 Participation Agreement dated effective as of April 16, 1997, Incorporated by
between Apache Overseas, Inc., and FX Energy, pertaining Reference(13)
to the Lublin Concessions
10.13 10 Letter Agreement dated February 27, 1998, between FX Energy Incorporated by
and Apache Overseas, Inc., regarding modification to all Reference (15)
agreements for acreage in Poland under established area of
mutual interest.
10.14 10 Participation Agreement dated effective February 27, 1998, Incorporated by
between FX Energy and Apache Overseas, Inc., pertaining to Reference (15)
the Western Carpathian Concession
10.15 10 Participation Option Agreement dated effective February 27, Incorporated by
1998, between FX Energy and Apache Overseas, Inc., Reference (15)
pertaining to the Pomeranian Concession
10.16 10 Prospect Agreement between Apache Poland Sp. z o.o., and FX Incorporated by
Energy Poland Sp. z o.o., dated April 17, 1998. Reference (18)
10.17 10 Option Agreement dated effective as of February 2, 1998, Incorporated by
between POGC, FX Energy, Inc., and Apache Overseas, Inc., Reference (15)
pertaining to the Western Carpathian Concessions
10.18 10 Option Agreement dated March 5, 1998, effective as of April Incorporated by
16, 1997, between FX Energy, Inc., Apache Overseas, Inc., Reference (17)
and POGC, relating to FX Energy's Carpathian Concessions.
10.19 10 Option Agreement between FX Energy Poland Sp. z o.o., and POGC Incorporated by
dated effective May 20, 1998, relating to Pomeranian Reference (19)
Concessions
10.20 10 Agreement dated October 21, 1996, between Sudety Mining Incorporated by
Company Sp. z o.o. and the State Treasury of the Republic Reference (9)
of Poland, for the establishment of the mining usufruct
for the purpose of gold exploration in the Sudety
Concessions
II-2
<PAGE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
------------ -------------- ---------------------------------------------------------------- -------------------
<S> <C> <C> <C>
10.21 10 Earn-In and Exploration Letter of Intent dated June 13, 1997, Incorporated by
between FX Energy and Homestake Mining Company of Reference (12)
California
10.22 10 Form of Mining Usufruct Agreement between the State Treasury Incorporated by
of the Republic of Poland and FX Energy Poland Sp. z o.o. Reference (15)
Commercial Partnership, dated October 16, 1997, relating
to Sudety Concession blocks 43, 63, 64, 65, with related
schedule.
10.23 10 Earn-in, Exploration, and Joint Venture Agreement between Incorporated by
Homestake Mining Company of California and FX Energy Reference (15)
effective December 31, 1997, regarding exploration for
precious metals in the Republic of Poland (Sudety)
10.24 10 Agreement between Apache Overseas, Inc., and FX Energy dated Incorporated by
effective January 1, 1999, pertaining to oil and gas Reference (20)
operations in Poland
10.25 10 Agreement on Cooperation in the Lachowice Area between POGC, Incorporated by
Apache Overseas, Inc., Apache Poland, Sp. Z o.o., FX Reference (20)
Energy, Inc., and FX Energy Poland Sp. Z o.o., dated
February 26, 1999
10.26 10 Frontier Oil Exploration Company 1995 Stock Option and Award Incorporated by
Plan* Reference(4)
10.27 10 Form of FX Energy, Inc., 1996 Stock Option and Award Plan* Incorporated by
Reference(10)
10.28 10 Form of FX Energy, Inc., 1997 Stock Option and Award Plan* Incorporated by
Reference (20)
10.29 10 Form of FX Energy, Inc., 1998 Stock Option and Award Plan* Incorporated by
Reference (20)
10.30 10 Employment Agreements between FX Energy and each of David Incorporated by
Pierce and Andrew Pierce, effective January 1, 1995* Reference(1)
10.31 10 Amendments to Employment Agreements between FX Energy and each Incorporated by
of David Pierce and Andrew Pierce, effective May 30, 1996* Reference(8)
10.32 10 Form of Stock Option with related schedule (D. Pierce and A. Incorporated by
Pierce) * Reference(1)
10.33 10 Form of Stock Option granted to D. Pierce and A. Pierce* Incorporated by
Reference(1)
10.34 10 Form of Non-Qualified Stock Option with related schedule* Incorporated by
Reference(4)
10.35 10 Letter Agreement dated effective August 3, 1995, between Incorporated by
Lovejoy Associates, Inc., and FX Energy re: Financial Reference(4)
Consulting Engagement*
10.36 10 Letter Agreement dated effective August 3, 1995, between Incorporated by
Lovejoy Associates, Inc., and FX Energy re: Reference(4)
Indemnification
10.37 10 Non-Qualified Stock Option granted to Thomas B. Lovejoy* Incorporated by
Reference(4)
II-3
<PAGE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
------------ -------------- ---------------------------------------------------------------- -------------------
<S> <C> <C> <C>
10.38 10 Letter Agreement dated effective December 31, 1997, between FX Incorporated by
Energy and Lovejoy Associates, Inc., re: Extension of Reference (15)
Consulting Engagement*
10.39 10 Employment Agreement between FX Energy and Jerzy B. Maciolek* Incorporated by
Reference(8)
10.40 10 Addendum to Employment Agreement between FX Energy and Jerzy Incorporated by
B. Maciolek* Reference (15)
10.41 10 Second Addendum to Employment Agreement between FX Energy and Incorporated by
Jerzy B. Maciolek* Reference (15)
10.42 10 Employment Agreement between FX Energy and Scott J. Duncan* Incorporated by
Reference (15)
10.43 10 Form of Indemnification Agreement between FX Energy and Incorporated by
certain directors, with related schedule* Reference(10)
10.44 10 Form of Option granted to executive officers and directors, Incorporated by
with related schedule* Reference(10)
10.45 10 Memorandum of Understanding regarding officer loans (reformed Incorporated by
June 19, 1998) Reference (16)
10.46 10 Limited Recourse Promissory Note of David N. Pierce in the Incorporated by
amount of $950,954 (reformed June 19, 1998) Reference (16)
10.47 10 Pledge and Security Agreement between FX Energy, Inc. and Incorporated by
David N. Pierce (reformed June 19, 1998) Reference (16)
10.48 10 Agreement to Hold Collateral between FX Energy, Inc. and David Incorporated by
N. Pierce and Kruse, Landa & Maycock as agent to hold Reference (16)
collateral (reformed June 19, 1998)
10.49 10 Limited Recourse Promissory Note of Andrew W. Pierce in the Incorporated by
amount of $769,924 (reformed June 19, 1998) Reference (16)
10.50 10 Pledge and Security Agreement between FX Energy, Inc. and Incorporated by
Andrew W. Pierce (reformed June 19, 1998) Reference (16)
10.51 10 Agreement to Hold Collateral between FX Energy, Inc. and Incorporated by
Andrew W. Pierce and Kruse, Landa & Maycock as agent to Reference (16)
hold collateral (reformed June 19, 1998)
10.52 10 Form of Indemnification Agreement between FX Energy and Incorporated by
certain directors, with related schedule Reference (21)
10.53 10 Agreement on Cooperation in Exploration of Hydrocarbons on Incorporated by
Foresudetic Monocline dated April 11, 2000, between Reference (22)
Polskie Gornictwo Naftowe i Gaxownictwo S.A. ("POGC") and
FX Energy Poland Ps. Z o.o. relating to the Fences project
10.54 10 Agreement effective as of January 1, 2000, between FX Energy, Incorporated by
Inc., and Apache Overseas, Inc. Reference (23)
10.1 10 Option Extensions with related schedules Incorporated by
Reference(24)
II-4
<PAGE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
------------ -------------- ---------------------------------------------------------------- -------------------
<S> <C> <C> <C>
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, independent accountants This Filing
23.2 23 Consent of Larry D. Krause, Petroleum Engineer Initial Filing
23.3 23 Consent of Kruse, Landa & Maycock, LLC Initial Filing
Item 27 Financial Data Schedule
--------------------------------------------------------------------------------------------
27.1 27 Financial Data Schedule Incorporated by
------------------------ Reference (24)
</TABLE>
* Identifies each management contract or compensatory plan or arrangement
required to be filed as an exhibit.
(1) Incorporated by reference from the registration statement on Form SB-2, SEC
File No. 33-88354-D.
(2) Incorporated by reference from the report on Form 8-K dated August 16,
1995.
(3) Incorporated by reference from the report on Form 8-K dated August 22,
1995.
(4) Incorporated by reference from the quarterly report on Form 10-Q for the
quarter ended September 30, 1995.
(5) Incorporated by reference from the annual report on Form 10-K for the year
ended December 31, 1995.
(6) Incorporated by reference from the reports on Form 8-K dated May 3, 1996.
(7) Incorporated by reference from the report on Form 8-K dated May 21, 1996.
(8) Incorporated by reference from the registration statement on Form S-1, SEC
File No.333-05583.
(9) Incorporated by reference from the report on Form 8-K dated October 1,
1996.
(10) Incorporated by reference from the annual report on Form 10-KSB for the
year ended December 31, 1996.
(11) Incorporated by reference from the proxy statement respecting the 1997
annual meeting of stockholders.
(12) Incorporated by reference from the quarterly report on Form 10-QSB for the
quarter ended September 30, 1997.
(13) Incorporated by reference from the report on Form 8-K dated August 6, 1997.
(14) Incorporated by reference from the report on Form 8-K dated April 4, 1997.
(15) Incorporated by reference from the annual report on Form 10-KSB for the
year ended December 31, 1997.
(16) Incorporated by reference from the annual report on Form 10-Q for the
quarter ended March 31, 1998, as amended on Form 10-Q/A filed July 15,
1998.
(17) Incorporated by reference from the report on Form 8-K dated March 23, 1998.
(18) Incorporated by reference from the report on Form 8-K dated April 20, 1998.
(19) Incorporated by reference from the report on Form 8-K dated June 2, 1998.
(20) Incorporated by reference from the annual report on Form 10-K for the year
ended December 31, 1998.
(21) Incorporated by reference from the annual report on Form 10-K for the year
ended December 31, 1999.
(22) Incorporated by reference from the report on Form 8-K dated April 18, 2000.
(23) Incorporated by reference from the quarterly report on Form 10-Q for the
quarter ended March 31, 2000.
(24) Incorporated by reference from the quarterly report on Form 10-Q for the
quarter ended September 30, 2000.
(b) Consolidated Financial Statement Schedules.
All schedules have been omitted because they are not required or because the
required information is given in the Consolidated Financial Statements or Notes
to those statements.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake
City, Utah, on November 13, 2000.
FX Energy, Inc.
By: /s/ Scott J. Duncan
--------------------------
Scott J. Duncan
Vice-President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated and on the 13th day of November, 2000:
------------------------------------------
/s/ David N. Pierce
Director, President, and Chief
Executive Officer
(Principal Executive and
Financial Officer)
------------------------------------------
/s/ Andrew W. Pierce
Vice-President, Chief Operations
Officer and Director
(Principal Operations Officer)
------------------------------------------ By: /s/ Scott J. Duncan
/s/ Thomas B. Lovejoy ---------------------
Director, Chief Financial Scott J. Duncan
Officer and Vice Chairman Attorney-in-Fact
------------------------------------------
/s/ Scott J. Duncan
Director, Vice-President Investor
Relations and Secretary
------------------------------------------
/s/ Dennis L. Tatum
Director, Vice-President and
Treasurer (Principal Accounting
Officer)
------------------------------------------
/s/ Peter L. Raven
Director
------------------------------------------
/s/ Jay W. Decker
Director
29
