FX Energy 9.25% Series B Cumulative Convertible Preferred Stock – Begins Trading

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The issue below began trading today (Thursday) and traded in a range of $24.40-$24.90 before closing at $24.90.  The issue did not trade on the OTC grey market prior to today.

We have decided to forego a purchase of this issue at this time.

July 10, 2014  7:16 pm

Tiny energy exploration and production company FX Energy (ticker:FXEN) is selling a 9.25% Convertible Preferred issue.  This issue while perpetual holds some interest for us.

FX Energy is an interesting play in that their main focus area is in Poland—yes really–Poland.  While headquartered in Salt Lake City they hold leases on 2.3 million acres in Poland and just released results from the most recent gas well they drilled and it seems to be a winner with 12 Bcf of recoverable gas and the best part of this is that natural gas pricing in Europe is much higher than in the U.S.  FX Energy receives over $7/mcf for their gas at the wellhead.

We believe this issue will come to market below par ($25/share) as the underwriting discount is $1.50/share so the underwriter has some room to pass on a taste of this discount to us (we hope).  If it is buyable under par the yield would make this worth a look.

FX Energy has been around for 25 years so they are not a new company, but total revenues are just in the $30-35 million range so certainly there is plenty of risk to this issue and one should do plenty of due diligence prior to purchase.

Details of the issue are here.

We are awaiting potential OTC grey market ticker (there was no grey market trading).

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