Fourth Consecutive Record for Revenues and Production
The Company reported its fourth consecutive quarter of record oil and gas revenues. Oil and gas revenues for the 2007 third quarter were $4.0 million, almost triple the $1.4 million for the 2006 third quarter. Total revenues, which include oil field services revenues, jumped to $5.2 million, again almost triple the $1.8 million for the 2006 third quarter.
The record oil and gas revenue came as a result of ongoing large production gains from the Company's properties in Poland. The Company reported its fourth consecutive quarter of record natural gas production in Poland. Gas production for the third quarter was at a new record of 466 Mmcf, some 700 percent above the 56 Mmcf for the same quarter of 2006. Total oil and gas production in Poland for the second quarter was 495 Mmcfe, compared to 59 Mmcfe during the third quarter of 2006. Total oil and gas production company- wide, including the company's US properties, jumped more than 200 percent to a new third quarter record of 598 Mcfe.
Costs Rise with Expanded Exploration Efforts and Increased Production
Total costs for the third quarter rose $1.5 million from $3.8 million in 2006 to $5.3 million for the 2007 period. The largest contributor was a $465,000 rise in exploration costs as the Company continues to establish a larger exploration presence in Poland. Lease operating expenses also rose by $307,000 due to the large increase in oil and gas production.
Clay Newton, FX's Vice President Finance, remarked, "Our first ever quarterly profit is certainly a new benchmark for us. Our investments in Poland, which have been very long-term and strategic in nature, are now showing meaningful financial results. We will continue to invest heavily there to broaden our position. We think the opportunities available to us there are almost unique for an oil and gas company of our size."
Mr. Newton continued, "We expect to see some production declines in the future from our existing producing wells in Poland. However, we currently have 3 wells there that are shut-in awaiting pipeline connections and gas sales contracts. These wells should add to our production and revenues in the future. We also anticipate that our new investments in Poland will add to future revenues. On balance, we're quite pleased with both our operations and financial results in Poland."
The Company reported earnings of $(5.1) million, or $(0.14) per share, for the first nine months of 2007, compared to $(8.0) million, or $(0.23) per share, for the same period of 2006. The narrowing loss was attributable to oil and gas revenue gains.
Those same oil and gas revenue and production gains drove earnings before interest, taxes, depreciation, amortization, and exploration expense (EBITDAX)(1) some 800 percent higher. EBITDAX rose from $(0.9) million to $6.5 million.
Like those of the third quarter, 2007 first nine month oil and gas revenues also reached record levels. The Company enjoyed oil and gas revenues of $11.3 million, compared to $3.7 million for the first nine months of 2006, an increase of 205%. Total revenues for the first nine months of 2007 were $13.9 million, compared to $5.1 million in the first nine months of 2006.
Natural gas production in Poland was 1,366 Mmcf during the first nine months of 2007, compared to 128 Mmcf during the same period of 2006. Total oil and gas production in Poland was 1,475 Mmcfe during the 2007 six-months, compared to 131 Mmcfe during the first nine months of 2006. Total company-wide production rose from 476 Mmcfe during the first nine months of 2006 to 1,787 Mmcfe for the 2007 first nine months.
The Company also reported positive cash flow from operating activities during the first nine months of 2007. The Company generated $234,000 in cash from operating activities during 2007. During the first nine months of 2006, the Company used $5.1 million in operating activities.
At September 30, 2007, the Company's working capital was $20.1 million versus $12.0 million at December 31, 2006. In addition to its working capital, the Company's $25 million international credit facility remains unused.
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