FX Energy has released test results from the recent Kromolice-2 discovery well. Analysis of the flow test data indicates absolute open flow potential of 47 million cubic feet per day (mmcf/d). The initial production rate is forecast at approximately 4.8 mmcf/d, based on a 5% drawdown. Depth mapping of the Kromolice-2 structure is ongoing based on new seismic processing. The Company plans to provide a proved reserves figure when final mapping is complete. FX Energy holds a 49% non-operating interest.
Production facilities for the Company's Roszkow well are under construction. The Company anticipates first gas production by the end of 2Q09. Roszkow is forecast to produce approximately 7.5 mmcf/d net to FX. This is forecast to increase total Company production significantly. In the first quarter of 2009, the Company's total production in the U.S. and Poland averaged 4.2 mmcfe/d.
Production facilities for Kromolice-2, along with two earlier discoveries, Kromolice-1 and Sroda-4, are in the planning and permitting stage. Permitting for the facility and pipeline is anticipated to take about one year, followed by an estimated six months for actual construction. The target for first production is 4Q2010. The three wells will tie into an existing line that currently serves another three wells, including the Company's Zaniemysl-3 well. This line is expected to have total available capacity for approximately an additional 14 mmcf/d. This available capacity is approximately 80% of the combined forecast initial plateau rate of the Company's three new wells. As a result, the Company anticipates adding its 49% share, approximately 7.0 mmcf/d net, to its Polish gas production from Kromolice-1, Kromolice-2 and Sroda-4 together. Cost of the new pipeline and facilities is estimated at approximately $8 million net to FX Energy.
In general the Company sells gas at the wellhead from its wells in Poland under contract at prices set as a percentage of posted tariffs. The tariffs were increased on two occasions in 2008, most recently at November 1, 2008. The current posted tariff for high methane gas is 998.30 zlotys per thousand cubic meters, or approximately $8.30 per mcf at an exchange rate of 3.25 zlotys to the dollar as of April 16, 2009; Henry Hub Spot was quoted at $3.53 per mcf on the same date. The Company's wells are linked to either the high methane tariff or the low methane tariff and the percentage is different for each well. In addition, the price is adjusted for the actual heating value of gas from each well. In the first quarter of 2009, the Company received an average $4.20 per mcf, or $5.08 per mmbtu, for all of the gas it produced in Poland.
Capital Budget for 2009
The Company currently estimates its capital budget for 2009 in the range of $15 to $20 million, subject to a number of factors including industry participation in projects, actual results of production projects, and oil and gas prices. We plan to fund this budget with cash on hand and cashflow from operations.
The drilling location is under construction for the previously announced Ostrowiec well. The well is expected to spud in approximately 30 days. The Ostrowiec well targets a 2-D seismic prospect in the Main Dolomite (Ca2) that has potential for up to 1 Tcfe of oil and gas in place. The secondary target of the Ostrowiec-1 well is Rotliegend Aeolian sandstones. The Ostrowiec prospect is located about 20 kilometers north of the Grotow carbonate platform and appears on seismic to be analogous to the Polish Oil and Gas Company's LMG oil and gas field, currently under development. FX Energy is the operator of Ostrowiec and will retain 51% interest; POGC will earn 49% interest in the well and 212,000 acres by drilling the Ostrowiec well. The Company will continue to hold 100% interest in the remainder of the 1.35 million acre Northwest concession area.
The Company is preparing to permit and tender for a drilling rig to test its Machnatka prospect in the Warsaw South concession. The Machnatka prospect is a 2-D defined Ca1/reef prospect covering an estimated 12 to 15 square kilometers at an estimated depth of approximately 3100 meters. There are no fields nearby that produce from this horizon. The well is planned for the second half of 2009. The Company holds 100% interest and plans to operate, although discussions with potential industry partners are ongoing.
The Company has identified a potential tight gas resource area, the Plawce area, in the northwestern part of its Fences concession. The Company's technical team is currently working on a possible conventional play, Plawce East, downdip from the Plawce area. Theoretically, Plawce East could have higher quality reservoir properties than the tight Plawce area. That could allow conventional production without stimulation. Additional geophysical work on this project will be carried out before drillsite selection. If the results of this work are positive, the Company plans to propose drilling Plawce East in the second half of 2009. FX Energy holds 49% interest and is not the operator.
Additional geophysical work is underway and planned for 2009, both in the Fences concession and in other concession areas held by the Company. It is possible that this work could lead to one or more additional wells in 2009. In particular, the Company anticipates making a drilling decision in the next few months on the Taczanow lead in the Fences concession based on new 2-D seismic. The Taczanow lead is on trend with two earlier discoveries, Zaniemysl and Roszkow.
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