FX Energy Provides Operations Update

 

Tuchola-4K well undergoes testing in in this photo from April, 2014. Photo courtesy FX Energy

Salt Lake City firm has operations in Treasure State

 
Published: Thursday, May 8, 2014 3:53 PM CDT
SALT LAKE CITY, UT –  FX Energy, Inc. (NASDAQ:FXEN), today announced that it has completed drilling operations on the Tuchola-4K well located on its Edge license in north central Poland, where the Company holds 100% working interest. The well now is being completed in the lower Zechstein/upper Devonian formation. Production tests reported April 30, 2014, indicate that the Tuchola-4K well, together with the original discovery well, Tuchola-3K, could produce initially at a combined rate of approximately 24 million cubic feet of gas per day (Mmcf/d). A sustained production and pressure test will be conducted and analyzed in the next several weeks to determine a reserve estimate, as addressed in more detail below.

The current development concept for Tuchola contemplates delivering gas into Poland’s high methane gas distribution system after extraction of helium (0.2356%) and liquid or compressed gas products and removal of nitrogen (45.39%). At current prices, this package of products should yield a sales price per produced-mcf comparable to the Company’s sales from its other producing wells in Poland. Production facilities, a nitrogen removal plant and the necessary pipeline are estimated to cost around $35 million, most of which would be spent in 2016 following about 18 months of permitting. The permitting process begins immediately. The Company has received inquiries from a number of potential gas buyers and facilities contractors.

“Though still an exploration play, the results of Tuchola-4K give us the confidence to devote more time, capital and resources to this developing play,” said David Pierce, CEO of FX Energy. “We plan to drill two more wells in the area this year, both of which were already included in our 2014 capital budget, with the next drill site selection expected in two to three months. Meanwhile, we will have been able to determine Tuchola reserves along with reserves and flow rates on any other discoveries that we might make. Development is obviously dependent on reserves and flow rates and we do not yet have an estimate of reserves. But if all goes well we could see first production as early as year-end 2016.”

The Company cautioned that reserves for the Tuchola field cannot be determined solely by the announced flow rates. A specially designed testing program of sustained gas flows and shut-ins, along with very high-precision pressure tests, is scheduled to be completed and analyzed in a few weeks with results announced as soon as available.

 

“We are dealing with something completely different from the Aeolian sandstone reservoirs that produce in our Fences license,” said Andy Pierce, VP of Operations for FX Energy. “In the Tuchola wells, and most likely throughout the Edge license, we will be dealing with carbonate reservoirs, with multiple types of porosity and natural fracturing. While carbonate reservoirs are prolific producing reservoirs around the world, they are notoriously heterogeneous and not good candidates for a volumetric approach to reserves estimation.”

Fences License

The Company also reported that drill site preparations are underway on the Baraniec well in the Lisewo area of the Fences license. Drilling operations are expected to begin in just over one month. Following rig release on that well, drilling is expected to start on the nearby Ciemierow well, also in the Lisewo area. Elsewhere in the Fences license, the Karmin well is scheduled to start drilling in approximately 75 to 90 days. The Karmin well is near the southeast boundary of the license and on trend with the Company’s two highest rate producing wells. Finally, in the Miloslaw area of the Fences license, northwest of the Lisewo area, two locations have been scouted and the operator is preparing its internal geological project documentation on both drill sites. The Company anticipates that the first of these two locations will start drilling in the fourth quarter this year.

Block 246, Block 229 and Warsaw South Licenses

In view of recent developments in the Tuchola project, the Company is deferring for now further field operations in its other exploration licenses in order to focus capital and other resources on its highest potential opportunities in the Edge and Fences licenses. The Company expects to clarify its plans in the next few months.

Montana Connection

Based in Salt Lake City, Utah, FX Energy has a Montana subsidiary, FX Drilling, that does well drilling and servicing. FX Drilling also operates 291wells in Montana.

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Author: montanaoilreport

After my first job at a newspaper -- delivering papers for the Jackson (TN) Sun, ink was in my veins. Since the 1970's I've worked in every area of the Printing and Publishing industry, with most of that time spent in the pressroom. In 2008 I moved to Montana and purchased the Sun Times of Fairfield (fairfieldsuntimes.com). In 2011 I realized that most media outlets were either ignoring, or attacking, the growing oil and gas industry in Montana, so I started the Montana Oil Report as the source of information on this important industry.

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