FX Energy to plug Kutno-2 well in Poland

10/31/2012

FX Energy to plug Kutno-2 well in Poland

SALT LAKE CITY -- FX Energy has made a decision to plug and abandon the Kutno-2 well in Poland after evaluation of the well data. Plugging operations are underway.

Although gas shows and porosity of up to 6% were seen in the upper Rotliegend, the well flowed only salt water. The Rotliegend in the Kutno-2 well appears to be fluvial in origin, with abundant clays, dolomites and shales intermixed with sands, according to a press statement issued by the company at its U.S. headquarters.

David Pierce, Chief Executive Officer of the Company, said, "We knew from the outset that the big risks in this well were drilling risk, gas quality and reservoir quality. We overcame the first two risks, but not the third. We had hoped that Kutno might contain the classic dune sands that we continue to encounter in the Fences concession. That would have been a very big prize, but unfortunately the reservoir quality is too poor to make Kutno-2 commercial."

"While we are disappointed by the outcome of this well, it is a known and unavoidable risk of the exploration business. The key is to keep a balance between lower risk drilling and production development, such as in the Fences concession, and high potential exploration in our other concession acreage in Poland," Pierce said in the

The PGNiG has earned a 50% interest in the Kutno concession in connection with its participation in the Kutno-2 well.

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