Oil and gas producer FX Energy (NASDAQ:FXEN) has allocated a budget of between $50-$70 million for 2011, an amount equal to all of the company's capital expenditures over the last three years, it said Wednesday.
The increase is a direct result of the aggressive drilling activities planned for 2011, FX said.
This year, the company plans on drilling one well in its Kutno concession, up to three wells in its Warsaw South concession and up to three more wells in its PGNiG's Fences concession - all in Poland. The operations form part of the company's two year program to test a number of high potential targets.
In the US, FX has initiated a program to assess the Bakken shale oil potential in its Montana properties.
Drilling expenditures are expected to make up more than half of the budget in 2011, with seismic making up one third, and production facilities accounting for the remainder. Seismic will focus on the Fences and Warsaw South concessions, but will also cover the Northwest, Edge and Block 246 concessions, with a view toward possible drilling in 2012, FX said.
Looking ahead, the company expects to equal or exceed this year's budget in 2012, with the Fences concession its primary focus.
"It is critically important that we increase the momentum of our conventional exploration while we still have first-mover advantage among foreign companies. There are a number of conventional plays yet to be drilled in Poland and in our acreage," said president and CEO David Pierce.
With operations in both the US and Poland, FX's main exploration activity is focused on Poland's Permian Basin, where the gas-bearing Rotliegend sandstone is a direct analog to the Southern Gas Basin in offshore England. The company's shares rallied nearly 5.5% on Wednesday to trade at $7.57 as of 10:28am EST.