FX Energy Begins Drilling Lugi-1 Well

FX Energy says that the Lugi-1 well in the Company's Fences I project area in western Poland has started drilling. The well is planned to test a "pinchout" type stratigraphic target in a Rotliegend sandstone at a depth of approximately 2,700 meters (9,000 feet). The Lugi-1 well is located approximately 8 kilometers from the Rusocin-1 discovery well that was drilled and completed earlier this year. The Polish Oil and Gas Company (POGC) is the operator of the well and owns 51%; FX Energy owns a 49% interest.

The Company also reported:

* The Sroda-5 well that began drilling on September 12, 2005, is at a depth of approximately 2,000 meters (6,600 feet). The well is expected to test a Rotliegend sandstone target at a depth of approximately 3,600 meters (11,800 feet).
* Seismic acquisition under a 400 km seismic acquisition program with POGC in the Fences I and II project areas is continuing. The seismic program will establish drillsites on Rotliegend structures for drilling under the Company's current planned operations in 2006, and will also cover additional potential targets in the Fences I "pinchout" play where the Lugi-1 well is now drilling.