Originally drilled by the Polish Oil and Gas Company (PGNiG) in 1983-85, the wells were tested for production but never produced commercially. FX Energy has entered into a joint venture agreement under which all costs of re-entering and completing the wells and building production facilities will be paid by the joint venture partner, regardless of whether or not the wells are determined to be commercial, in exchange for discounted pricing on gas deliveries. The project is expected to come on-stream in about one year at a rate of approximately 1 mmcf/day, based on the original test data and subject to successful re-entry of the wells. The joint venture partner is PL Energia S.A., headquartered in Krzywoploty, Poland.
"This joint venture allows us to utilize a potentially valuable resource with no investment cost, preserving our financial resources to focus on the Fences I/II area," said David Pierce, president of FX Energy. "We are particularly pleased that our partner is a Polish company with a successful history in the downstream gas sector."
PL Energia's main business area is building infrastructure aimed at utilizing efficient and environmentally friendly energy sources, concentrating on cooling, heating and power (CHP) projects. PL Energia utilizes supplementary natural gas and petrol resources and solar energy in its comprehensive energy supply solutions.
Work on the Grabowka field will satisfy the concession work requirements through December 2009 with respect to the central block, Block 287, of the Fences III area. FX Energy will release the surrounding blocks in an ongoing strategy to highgrade the Company's acreage and to maintain focus on its most prospective holdings.
FX Energy, Inc. holds a land position of 250,000 acres around its Wilga discovery and over 3.2 million acres in western Poland's Permian Basin. The Permian Basin's gas-bearing Rotliegend sandstone is a direct analog to the Southern Gas Basin offshore England, and represents a largely untapped potentially significant gas resource.
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