The offer has been approved by the Board of Directors of FX Energy. Under the terms of the agreement, ORLEN Upstream will announce a Tender Offer for the company shares. ORLEN Upstream plans to purchase shares tendered by FX Energy shareholders through a subsidiary of ORLEN Upstream registered in US. The total transaction value including the assumption of FX Energy net debt will amount to ca. USD 119 million (ca. PLN 442 million).

In line with our strategy in the upstream segment we strive to achieve potential production of 6 mln boe/y in 2017. Today we initiated the process of acquisition of FX Energy, which is the next step in building the upstream portfolio in Poland and abroad. This will allow us to diversify it through expanding our conventional assets and commence production of hydrocarbons by PKN ORLEN in Poland.- said Jacek Krawiec, President & CEO of PKN ORLEN.

The assets owned by FX Energy in Poland are located in two areas (Fences and Edge) in the Lowland Poland. The company also possesses a concession block in the Lublin Basin neighbouring ORLEN Upstream's concessions (Wołomin and Garwolin). FX Energy also produces crude oil from conventional assets in Montana and Nevada, USA.

Fences consists of 4 exploration blocks located in Greater Poland Voivodeship in well recognized prospective areas containing numerous concentrations of hydrocarbon deposits. The primary target reservoir and prospective subsurface is Rotliegend sandstone, at a depth below 2,000 meters. This area is perceived as one of the most prospective exploration areas of this kind of geological formation in Poland, with reduced exploratory risk attached. FX Energy owns 49% in 7 producing fields (the remainder being held by Polskie Górnictwo Naftowe i Gazownictwo (PGNiG). The net production amounts to ca. 350 thousand m3 per day of the nitrogen-rich natural gas. The Edge project area consists of 4 exploration blocks 100% owned by FX Energy. The most prospective geological zones in this concession area are the Zechstein and Devonian carbonaceous formations. In addition, in 2013 the company discovered Tuchola deposit currently being prepared for development.

In concession area 255, located in the Lublin Basin, FX Energy holds 51% of shares and has an operator status. PGNiG is a minority shareholder. Main exploration targets are Carboniferous sands and shales as well as Devonian carbonate rocks. A commercial deposit (natural gas plant Wilga) had also previously been discovered at the concession area.

We recognize significant opportunity for ORLEN Upstream to create more synergies in exploration & production projects in Poland thanks to the competences of combined teams and assets - commented Wiesław Prugar, President & CEO of ORLEN Upstream.

Signing the agreement makes the first step to acquisition which is expected to close in 4Q, 2015 or 1Q, 2016. Purchase of all of shares currently held by shareholders will be conducted through a subsidiary of ORLEN Upstream, which will be merged with FX Energy. At the moment of the acquisition the company will be delisted from NASDAQ. Simultaneously, the required approvals of regulatory authorities in Poland, US and other countries related to ORLEN Group activities are pending.