FX Energy (NASDAQ:FXEN) is an independent oil and gas company engaged in exploration, development and production opportunities in the Republic of Poland. The company's ongoing activities in Poland are conducted in five project areas: Fences I, II and III, Pomeranian and Wilga, but it is working almost exclusively on the three Fences project areas, where the gas-bearing Rotliegendes sandstone reservoir rock in Poland's Permian Basin may be a direct analog to the Southern North Sea gas basin, offshore England.
FX Energy is focusing its efforts in the Fences area because there have been gas reserves developed and produced by the Polish Oli & Gas Company in this Rotliegendes trend, and the firm believes there are likely to be additional gas and oil reserves in the same horizons which can be identified through the application of geophysical techniques that have not previously been applied in the region.
FX Energy has been one of the best performing Oil & Gas Equipment stocks in the past 8 weeks, nearly doubling in share value since November, 2004. But, analysts say this issue has "room to run" with substantial potential for expanding its reserves in western Poland's Permian Basin. In addition, the strength of the underlying market sector should provide near-term support while the stock price consolidates from recent gains. Even with a pull-back to support near the $9-$10 range, this company would certainly be a good portfolio holding for investors who favor the outlook for the energy segment. Consider targeting a higher premium initially to increase the maximum return on investment.
Sell Put MAR 10.00 IWQ-OB
Current Bid = $0.30 Open Interest = 610
Potential Profit (5 contracts) = $150
Initial Margin (5 contracts) = $1,515
Return on Investment (max) = 6.5%
Cost Basis in Stock = $9.70
Days to Expiration = 46