Dutton Associates Announces Investment Opinion: FX Energy Buy Rating In Update Coverage By Dutton Associates.

EL DORADO HILLS, Calif. -- Dutton Associates updates its coverage of FX Energy (NASDAQ:FXEN) reiterating a Buy rating and a 12 month price target of $17.00. The 10-page report by Dutton senior analyst Les Childress is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals.

We believe FX Energy remains an intriguing story, if not somewhat difficult to value by traditional metrics. In the long term, the potential for this natural gas E&P company with primary operations in Poland could be significant. We view Poland as having quite low political risk now that it is a European Union member country. Operational risk in the country could also be characterized as low. FX has established a tight working relationship with officials of the Polish government and the Polish Oil and Gas Company (POGC). The latter is FX's partner in two of its three projects. FX has a huge land position of 1.7 million acres in Poland's Permian Basin, but the primary thesis for FX, and the principal investment theme for the shares, is exploration of previously under-explored Permian Basin targets by a highly renowned geo technical team headed by geologist, Dr. Richard Hardman. This basin seems to have the same geologic characteristics as that of the rich natural gas bearing regions of the British Southern North Sea, based on some initial drilling by the POGC and FX, as well as available seismic data and interpretation. Up to now, very little exploration on a relative basis has been conducted in Poland by the POGC or anyone else to prove the theory that these Rotliegendes targets most likely contain natural gas. When Poland was under communist domination, seismic data existed but could not clearly image the Rotliegend structures. While there was some success in drilling this play "blind" between the mid-1960's and mid-1980's there has been very little drilling activity to the Rotliegendes since that time. This lack of exploration was primarily due to Poland's isolation from the West and its inability to participate in the technical advances occurring in the Southern North Sea.

We view FX's acreage position and its technical team as its key competitive advantage. The large position will allow it to proceed on a high growth platform over the next several years, as well as give it a leg up versus new entrants in Poland, who would likely find it extremely difficult to replicate FX's structure. Theoretically, the Company could be exposed to 2.4-2.8 Tcf of reserves, which, if proven, could in our opinion yield an asset value exceeding $25 per share. There simply has not been enough drilling yet. We have assumed in our asset valuation a conservative 2.4 Tcf. We maintain our BUY rating on the shares and target price of $17 over the next 18 to 20 months.

About Dutton Associates

Dutton Associates is one of the largest independent investment research firms in the U.S. Its 27 senior analysts are primarily CFAs and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 120 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.

The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $33,000 from the Company for 4 Research Reports with coverage commencing on 7/20/2004. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.