FX Energy
Posted: Tue Mar 08, 2011 2:03 pm
FXEN had somewhat disappointing 4th quarter results plus they announced delays on getting two Kromolice wells tied in, thus reducing their production forecast for 2011. When all wells currently waiting on completion (not including Lisewo) are on-line (sometime in Q2) the company's production should be up to 17,000 mcfepd. Q4 production was just over 10,100 mcfepd so this will be quite a jump by the end of Q2.
I think the market was also disappointed by the fact that it will take two years to get Lisewo on-line. I expected this since it takes a long time to get facilities designed and constructed for a project of this size, especially in a country like Poland that has more red tape than we do. 2-3 more development wells will be drilled and ready for tie-in prior to first production. There is room for a total of six wells on the prospect. Frac jobs could significantly increase production rates on the Lisewo wells.
I have reduced my Fair Value estimate to $10/share. < $8 based on my cash flow forecast + $2 for exploration upside.
Upside:
> FXEN will be drilling 6-9 new wells this year, including 3-4 development wells in the Fences area, 3-4 high potential exploration wells in Poland and a Bakken Shale test well this summer in eastern Montana.
> FXEN has a large acreage position in Poland and a multi-year prospect inventory.
> Total unrisked potential is ~$30/share
I think the market was also disappointed by the fact that it will take two years to get Lisewo on-line. I expected this since it takes a long time to get facilities designed and constructed for a project of this size, especially in a country like Poland that has more red tape than we do. 2-3 more development wells will be drilled and ready for tie-in prior to first production. There is room for a total of six wells on the prospect. Frac jobs could significantly increase production rates on the Lisewo wells.
I have reduced my Fair Value estimate to $10/share. < $8 based on my cash flow forecast + $2 for exploration upside.
Upside:
> FXEN will be drilling 6-9 new wells this year, including 3-4 development wells in the Fences area, 3-4 high potential exploration wells in Poland and a Bakken Shale test well this summer in eastern Montana.
> FXEN has a large acreage position in Poland and a multi-year prospect inventory.
> Total unrisked potential is ~$30/share