FX Energy Provides Operations Update

FX Energy

issued an operations update on its activities in Poland. Kutno-2 Well The Kutno-2 well has reached a depth of 6,576 meters, 126 meters deeper than the projected total depth when the well was originally started. The well has encountered reasonably good gas shows and temperatures favorable for hydrocarbon presence throughout the Rotliegend section. However, the porosities seen in the well cores are not as good as have been encountered in the Company's successful Rotliegend wells at shallower depths in the Fences concession. The Company currently plans to continue drilling and coring for an as yet undetermined number of meters, then run a drill stem test to gauge well bore gas entry rate and gas composition. Andy Pierce, Vice President of Operations, cautioned, "We appreciate the high level of interest in this well from our shareholders. However, it is simply too early to speculate as to a definitive result. We will continue to provide updates as events warrant." The Kutno-2 well is being drilled together with the Polish Oil and Gas Company (PGNiG). PGNiG will earn a 50% interest in the Kutno concession in connection with its participation in the Kutno-2 well. Frankowo-1 Well The Company's 100% owned Frankowo-1 well has reached the base of the Zechstein formation at a depth of 2,040 meters. The well has been logged and casing is currently being run prior to drilling into the Rotliegend target horizon. While drilling through the Zechstein, a 45.5 meter (149 feet) section of Main Dolomite was encountered. Logs and samples show that the entire Main Dolomite horizon is gas saturated with good fracture and matrix porosity. Gas quality and hydrocarbon content is not currently known; regionally, however, Main Dolomite gas has shown hydrocarbon content in the 20-40% range plus associated condensate. As soon as the casing has been cemented the Company plans to drill, core and test the Rotliegend sands, the primary target in this well. If the Frankowo-1 well is a commercial success in the Rotliegend, the Company will complete the well for production and drill a second well nearby to test the Main Dolomite. If Frankowo-1 is not successful in the Rotliegend, it will be plugged back to test the Main Dolomite. Frankowo-1 is located in FX Energy's 100% held Block 246, which covers approximately 241,000 acres immediately to the southwest of the Fences concession. The concession may have potential in the Rotliegend, Carboniferous, Main Dolomite and Zechstein Limestone horizons. Tuchola-1 Drilling and service contractors for the Tuchola-1 well have been selected and location work is underway. The Tuchola-1 well is expected to begin drilling in November. The well is designed to test two independent target horizons: gas potential in the Ca2 Main Dolomite at a depth of approximately 2,550 meters, and oil potential in the Devonian from a depth of approximately 3,180 meters to 3,820 meters. The Tuchola-1 well is located on the Company's 100% owned Edge concession, which covers approximately 881,000 acres in four separate blocks in northern Poland. Mieczewo-1K Drill site preparation is underway at the Mieczewo-1K location with a spud date expected in the fourth quarter of this year. The Mieczewo-1K is designed to test for gas in the Rotliegend in the Fences concession, approximately 5 kilometers west of the currently producing Kromolice-2 well. PGNiG is the operator of the well and holds a 51% interest; the Company holds a 49% interest. Komorze-3 and Lisewo-1K Wells Mechanical difficulties during the initial test of the Komorze-3 well required recompletion of the well. A production test will be carried out as soon as the recompletion work is finished. The Komorze-3 well compares favorably in terms of gas column and porosity to the Lisewo-1K well, approximately 4 kilometers to the southwest. The Lisewo-1K was production tested in 2011 and is forecast to produce at an initial plateau rate of approximately 4.5 to 5.0 million cubic feet per day. Work is underway on a production facility that will serve both the Lisewo-1K and the Komorze-3 wells. Production is forecast to commence in the second half of 2013. PGNiG is the operator of both wells, which are located in the eastern portion of the Fences concession. PGNiG holds a 51% interest in the Fences concession; the Company holds a 49% interest. Plawce-2 Halliburton has been selected as the contractor for fracture treating the Plawce-2 well. Operations are expected to be completed during the fourth quarter, although no specific start date has been set. The Plawce-2 well was completed in 2011 in an area where the Rotliegend sands were known to be tight. The fracture treatment is intended to determine whether commercial rates of gas production can be obtained through a vertical well in this immediate area. Plawce-2 is located in the northwestern portion of the Fences concession. PGNiG is the operator of the well and holds a 51% interest; the Company holds a 49% interest.