OREANDA-NEWS. 2015 normalised LIFO-based EBITDA (operating profit plus depreciation/amortisation) was PLN 2,156m (2014: PLN 1,391m), the best result in the history of LOTOS.

2015 EBIT totalled PLN 423m, with EBIT adjusted for the LIFO effect amounting to PLN 1,441m.

In 2015, LOTOS reported record-high volumes of hydrocarbon production and processing at the refinery in Gda?sk. The average daily output from the fields located in Poland, Norway, and Lithuania was close to 28,400 boe,and the refinery operated by Grupa LOTOS S.A. in Gda?sk processed more than 10.2 million tonnes of crude oil.

“This past year was an important milestone on our growth path,” says Pawe? Olechnowicz, Grupa LOTOS CEO. We managed to exceed key strategic targets set for 2011?2015 in the upstream segment and the wholesale and retail fuel markets in Poland. 2016 opens a new chapter of growth for LOTOS, where our key goals will be to further enhance Poland’s energy security, help with the industrialisation of the national economy, and achieve substantial growth in company value.

In its Strategy for 2011?2015 LOTOS set the hydrocarbon production target at 24 thousand boe/d (with the actual output having reached 28.4 thousand boe/d) and the wholesale and retail fuel market share targets at 30% and 10%, respectively. The wholesale and retail market shares achieved at the end of 2015 were 31.1% and 10.5%, respectively.

“2015 also marked the start of the EFRA Project, the largest capital investment programme in the Pomerania region, worth PLN 2.3bn,” added Mr Olechnowicz.

Once completed, the deep oil conversion complex built under the Project will deliver numerous benefits, including an around USD 2/bbl increase in the refining margin. The EFRA Project will also enable LOTOS to produce an additional 900 thousand tonnes of fuels a year, mainly diesel oil, which will be placed on the Polish market. The work on the project launched last year is scheduled for completion in 2018.

“EFRA is a natural continuation of the wider effort to technologically modernise our refinery, supplementing the crude oil processing configuration created under the 10+ Programme. The Project will take the Gda?sk refinery to the top of the world’s efficient refining,Mr Olechnowicz said.

Solid performance despite external pressures

The strong decline in crude prices (nearly 47% year on year) and the downward trend in the prices of petroleum products had an adverse effect on the results reported by LOTOS. Last year, the Company booked PLN 22.7bn in consolidated revenue, with a net loss of PLN 263m.

The reported net loss was primarily driven by finance costs, including foreign exchange losses of close to PLN 345m, arising from the stronger average USD/PLN exchange rate (up 20% year on year) in 2015, which affected the valuation of outstanding bank loans denominated in the US dollar.

In the reporting period LOTOS generated PLN 1,488m in cash flows from operating activities (2014: PLN 1,381m) – a visible proof of LOTOS’ stable financial condition.

Major increase in hydrocarbon production – Sleipner and B8

2015 saw LOTOS Petrobaltic’s combined production in Poland, Norway and Lithuania rise to an all-time high of 28.4 thousand boe/d. Despite the depressed oil and natural gas prices, LOTOS Petrobaltic marketed a larger volume of hydrocarbons produced from its assets, which included output from the recently purchased interests in the Sleipner gas field in Norway and initial production from the B8 field in the Baltic Sea.

B8 is now the largest oil extraction facility in the Polish economic zone of the Baltic Sea, with production potential estimated at 3.5m tonnes of crude. LOTOS Petrobaltic will produce up to 5 thousand boe/d from the B8 field once target production levels are reached.

Upstream EBITDA totalled PLN 185m in 2015, compared with a loss of PLN 280m the year before.

Record throughput, rising sales

In 2015, the LOTOS refinery processed a record 10.2m tonnes of crude (2014: 9.5 million tonnes). The refinery’s annual capacity utilisation rate was 97%.

In 2015, LOTOS sold a total of 10.9 million tonnes of products, which is approximately 8.4% more than in 2014. The rise in output and sales was an effect of refining margins remaining very strong for the most part of 2015.

Normalised EBITDA at record highs for LOTOS service stations

As at the end of 2015, the LOTOS retail chain comprised 476 stations. A total of 35 new service stations, including 25 sites in the LOTOS Optima economy segment, were added during the year. Successful optimisation efforts improved the financial performance of the LOTOS retail network. Normalised 2015 EBITDA amounted to PLN 112m, compared with PLN 95m in 2014 and PLN 44m in 2013.

Communications Office, Grupa LOTOS S.A., ul. Elbl?ska 135, 80-718 Gda?sk, Poland, tel. (+48 58) 308 87 31, (+48 58) 308 83 88, (+48 58) 308 83 55, e-mail: media@grupalotos.pl

 2015 highlights:

Normalised LIFO-based EBITDA: 2,156m (up 55% year on year)

Operating cash flow: PLN 1,488m (up 8% year on year)

Oil and gas production volume: 28.4 thousand boe/d (up 124% year on year)

Crude throughput: 10.2 million tonnes (up 7% year on year)

Number of service stations: 476 (up 8% year on year)

2015 macro environment:

Brent Dated price: USD 52.28/bbl (down 47% year on year)

Model refining margin: USD 7.77/bbl (up 28% year on year)

Brent-Urals differential: USD 1.83/bbl (up 6% year on year)

Year-on-year change in USD/PLN exchange rate: year-end rate up 11% and yearly average up 20%