PKN ORLEN Capital Group
February 2015
22
Integrated oil&gas company with energy assets
KEY DATASHAREHOLDERS STRUCTURE
DOWNSTREAM
� Refineries in Poland (supersite in Plock), Lithuania and the Czech Rep.
� Strategic location on key pipeline network and access to crude oil sea
terminals in Gdansk (Poland) and Butinge (Lithuania)
� REBCO crude oil processing - benefiting from B/U diff
� Petrochemical assets fully integrated with the refining
� Building industry cogeneration (CCGT) 463 MWe in Wloclawek and
596 MWe in Plock
RETAIL
� 2 700 filling stations: Poland, the Czech Rep., Germany and Lithuania
UPSTREAM
� Poland: exploration shale gas projects as well as conventional projects
� Canada: TriOil – production assets
OPERATIONAL (mt/y):
Max. throughput capacity ca. 32.4
Downstream sales ca. 27.7
FINANCIAL (PLN bn): 2010 2011 2012 2013 2014
Revenues 83.5 107.0 120.1 113.9 106.8
EBITDA LIFO 4.1 3.9* 5.2* 3.2 5.2*
* EBITDA LIFO before impairments. Impairments amounted to:
2011 PLN (-) 1,8 bn; 2012 PLN (-) 0,7 bn; 2014 PLN (-) 5,4 bn
� Listed since 1999
� WSE ticker: PKN
� Mcap: ca. PLN 23 bn**
� WSE indices included:
WIG, WIG 20, WIG 30,
WIG fuels
** 30.01.2015
Free float
72,48%
State Treasury
27,52%
3
PKN ORLEN vision
� Strong position on large and growing
markets
� Strong customer focus
� Integrated value chain
� Operational excellence
� Sustainable Upstream development
� Modern management culture
2008 … 2017…… 2013…
Retail
Downstream
Upstream
Downstream
4
� 32.4 mt/y - max. throughput capacity: Plock – 16.3 mt/y,
ORLEN Lietuva – 10.2 mt/y, Unipetrol – 5.9 mt/y
� Ca. 90% of crude oil throughput is REBCO type which allows
us to benefit from B/U differential
� Fuel production in line with 2009 Euro standards in all
refineries
� Market share*: gasoline (PL: 65%, CZ: 39%, LT: 96%) &
diesel (PL: 59%, CZ: 36%, LT: 96%).
KEY DATA
HIGH-CLASS ASSETS
Downstream (refining)
* Data as of 31.12.2014
** Poland, Lithuania, the Czech Republic
COMPETITIVE ADVANTAGES
� Refinery in Plock classified as a super-site (acc. to
WoodMackenzie) considering the volume and depth of
processing, integration with petrochemical operations
� Modernized refining assets in Lithuania and in Litvinov
� Prepared for regulatory and market trends changes thanks
to investment projects execution
� Leader on the fuel market in the Central Europe**
THROUGHPUT AND UTILISATION RATIO mt; %
28,1 27,8 27,9 28,2 27,3
91 90 89 88
2013201220112010
84
2014
Utilisation ratio %
5
� Petrochemical sales volumes: 5.4 mt/y
� Depending on the product we have 40% up to 100% market
share in domestic consumption
� Polyolefins sales within Basell network
� PX/PTA - one of the most advanced petrochemical complex in
Europe with production capacity of 600 kt/y PTA
KEY DATA
INTEGRATED ASSETS
ANWIL – CHEMICAL COMPANY
Downstream (petrochemicals)
COMPETITIVE ADVANTAGES
� The largest petrochemical company in Central Europe*
� Integration with refinery allows for savings.
� Attractive portfolio of products including PTA, polyolefins,
butadiene
� Strategic regional supplier for chemical industry
� PVC and fertilizers producer
� Ethylene pipeline connection with Plock refinery secures
feedstock for PVC production
� Synergies with new CCGT plant: heat energy, electricity and
infrastructure
* Poland, Lithuania, the Czech Republic
6
INDUSTRY COGENERATION PROJECTS
Downstream (energy)
ASSETS EFFICIENCY IMPROVEMENT COMPETITIVE ADVANTAGES
� Power plant in Plock (345 MW, 1970 MWt) – the biggest
industrial block in Poland.
� Heating oil, refining gas and natural gas - fuels used for
energy and heat production in Plock and Wloclawek plants.
� PKN ORLEN the biggest gas consumer in Poland and
active participant for natural gas market liberalization.
� Favorable perspectives for energy market eg. increase of
electricity demand not addressed by new projects, increasing
supply-demand gap resulting from closures of old units and
low-emission of gas.
80
443025
2040203020252017
PLANS FOR BLOCKS CLOSURES IN POLAND# block as a % of total, 2012-2040*
24%
43%29%
78%
The highest profitability / the lowest risk , thanks to guarantee of permanent receiving of steam, which enables to achieve very high efficiency
Building a CCGT plant in Wloclawek (463MWe)
� Start-up of energy production in 4Q15
� CAPEX PLN 1,4 bn
Building a CCGT plant in Plock (596 MWe)
� Start-up of energy production in 4Q17
� CAPEX PLN 1,65 bn
* PKN ORLEN analysis
7
� Over 2 700 filling stations*: Poland - 1768, Germany - 559, the
Czech Rep. - 339, Lithuania - 26
� Market share*: PL: 37%, CZ: 15%, LT: 4%, DE: 6%
� 1250 Stop Cafe and Stop Cafe Bistro in Poland.
Every second we sell 1 hot-dog (35m hot-dogs per annum) and
over 5m litters of hot drinks yearly (2,5 Olympic swimming
pools)
� The largest group of loyal customers in Poland: 2,5 m of active
customers VITAY and FLOTA programs
KEY DATA
Retail
* Data as of 31.12.2014
MODERN SALES NETWORK COMPETITIVE ADVANTAGES
� The largest retail network in Central Europe
� ORLEN brand – strong, recognizable and the most valuable in
Poland (PLN 4,4 bn)
� Successful strategy of differentation for filling site brands
and offered fuels.
� Further development of nonfuel sales by extension of Stop Cafe
and Stop Cafe Bistro
STOP CAFE & STOP CAFE BISTRO IN POLAND#
1 250
1 047
813
653626
500
600
700
800
900
1 000
1 100
1 200
1 300
4Q144Q124Q10 4Q134Q11
Upstream
Exploration projects in Poland
Poland
Unconventional projects
� Currently 11 wells finished: : 7 vertical, 4 horizontal and 3 fracking of
horizontal wells, including 3 wells and 1 fracking in 2014
� In 2015 4 wells, 1 fracking and acquisition of seismic data in a base
plan
Lublin Shale (11 wells)
� In 4Q14 horizontal well was made (Wierzbica) and vertical well was
started (Wołomin). Processing and interpretation of 2D seismic data
were finished (Wołomin)
Mid-Poland Unconventionals and Hrubieszów Shale (0 wells)
� In 4Q14 works on update of geological model and assessment of
concession areas prospects were finished - realization of further
works on Hrubieszów concession was withdrawn
Conventional projects
� Currently 3 wells finished, including 1 well in 2014
� In 2015 1 well in a base plan
Project Sieraków (2 wells)
� In 4Q14 continuation of analysis of data to verify area prospects and
update works schedule
Project Karbon (1 well)
� Finishing of processing and interpretation of new 2D seismic data
(Lublin) in 4Q14
2
11
Lubartów
1
Garwolin
11
Wodynie-
Łuków
1
3
2
1
Wierzbica
vertical wellhorizontal wellfracking
8
� EBITDA 4Q14*: PLN (-) 10 m
� CAPEX 4Q14: PLN 19 m
Conventional projects
Unconventional projects
2
1
� EBITDA 12M14**: PLN (-) 33 m
� CAPEX 12M14: PLN 144 m
* Data without impairment of the value of expenditures in the amount of PLN (-) 3 m
** Data without impairment of the value of expenditures in the amount of PLN (-) 11 m
Canada
TriOil - upstream company
Assets
� Assets in Canadian Alberta province is located on four areas: Lochend,
Kaybob, Pouce Coupe and Ferrier/Strachan
� Total reserves: ca. 49,5 m boe of crude oil and gas (2P)
2014:
� Drilling of 36 new wells (21,7 net*)
� Average production amounted to ca. 5,8 th boe/d (ca. 50% liquid
hydrocarbons, 50% gas)
2015:
� Planned average production of 8,9 th boe/d and capex ca. PLN 0,4 bn
in a base plan
� Update of the plan for 2015 taking into account current situation on a
crude oil market is in process.
4Q14
� In 4Q14 drilling of 9 new wells (6 net*), 14 fracking (6,2 net*) were done
and 18 wells to production (8,8 net*) were included
� Average production amounted to ca. 8 th boe/d (51% liquid
hydrocarbons)
� Production at the end of 4Q14 amounted to 8,4 th boe/d
� At the end of 4Q14 total production from 133,2 wells net*
9
Upstream
Production projects in Canada
9
* Number of wells multiplied by share percentage in particular asset
** Data without impairment of the value of expenditures in the amount of PLN (-) 311 m
*** Data does not include Birchill Exploration LP acquisition in the amount of PLN 708 m in 2Q14
� EBITDA 4Q14**: PLN 52 m
� CAPEX 4Q14: PLN 121 m
� EBITDA 12M14**: PLN 185 m
� CAPEX 12M14***: PLN 355 m
10
PKN ORLEN competitive advantages
Downstream
Retail
Upstream
� Integrated, high-class assets and strong position on competitive market
� Best locations and synergies of gas-fired power generation with other segments
� Modern and the largest sales network in the region with strong and
recognizable brand
� Upstream in Canada and perspective shale gas licenses in Poland
� New units and attractive portfolio of products offered on developing markets
Further PKN ORLEN growth
11
Mission and Corporate Values
RESPONSIBILITYWe respect our customers, shareholders, the natural environment and local communities
PROGRESSWe explore new possibilities
PEOPLEWe are characterized by our know-how, teamwork and integrity
ENERGYWe are enthusiastic about what we do
DEPENDABILITYYou can rely on us
„We discover and process natural resources to fuel the
future”
1212
Thank You for Your attention
For more information on PKN ORLEN, please contact Investor Relations Department:
phone: + 48 24 256 81 80fax: + 48 24 367 77 11e-mail: [email protected]
www.orlen.pl
13
Agenda
Supporting slides
14
Source: Oil & Gas Journal, PKN Orlen own calculations, Concawe,Reuters, WMRC, EIA, NEFTE Compass, Transneft.ru
Refinery (capacity m tonnes p.a.; Nelson complexity index)
�Oil pipeline [capacity]
Refinery of PKN ORLEN Group
Projected Oil pipeline
Sea terminal [capacity]
Lisichansk
(8.5; 8.2)
Batman
(1.1; 1.9)
Yaroslavi
Ingolstadt
(5.2; 7.5)
Litvinov (5.5, 7.0)
Kralupy
(3.4; 8.1)
Plock
(16.3; 9.5)
Gdansk
(10.5; 10.0)
Mazeikiai
(10.2; 10.3) Novopolotsk
(8.3; 7.7)
Mozyr
(15.7; 4.6)
Bratislava
(6.0; 12.3)
Schwechat
(10.2; 6.2)
Burghausen
(3.5; 7.3)
Holborn
(3.8; 6.1)
Bayernoil
(12.8; 8.0)
Harburg
(4.7; 9.6)
Leuna
(11.0; 7.1)
Schwedt
(10.7; 10.2)
Aspropyrgos
(6.6; 8.9)
Corinth
(4.9; 12.5)
Elefsis
(4.9; 1.0)
Thessaloniki
(3.2; 5.9)
Izmit
(11.5; 6.2)
Izmir
(10.0; 6.4)
Kirikkale
(5.0; 5.4)
Duna
(8.1, 10.6)
Arpechim
(3.6; 7.3)
Petrobrazi
(3.4; 7.3)
Petrotel
(2.6; 7.6)Rafo
(3.4; 9.8)
Petromidia
(5.1; 7.5)
Rijeka
(4.4; 5.7)Sisak
(3.9; 4.1)
Novi Sad
(4.0; 4.6)
Pancevo
(4.8; 4.9)
Neftochim
(5.6; 5.8)
Drogobich
(3.8; 3.0)
Kremenchug
(17.5; 3.5)
Odessa
(3.8; 3.5)
(ex 12)
Kherson
(6.7; 3.1)
DRUZHBA
DRUZHBA
DRUZHBA
ADRIA
IKL
ADRIA
�(18) Ventspils
Butinge(14)
�
(70) Primorsk� Kirishi
Yuzhniy
(ex 4)�
Brody
Tiszaojvaro
s
�
Triest�
�
Rostock�
[Ca 55]
�[C
a 2
2]
�� ��[C
a 3
0]
Novorossiys
k
(ex 45)
�
Trzebinia
(0,5)
Jedlicze
(0,1)
Naftoport(30)
[Ca 20][Ca 9]
[Ca 10]
[Ca 9][Ca 3,5]
Supply Routes Diversification
�(30) Ust-Luga
BPS2
1515
ORLEN Lietuva - maximizing the possessed potential
KEY FACTS
ASSETS
Crude pipeline
Products pipeline
Rail transport
Pump station
Terminal
Storage depot Mažeikių
Nafta
Klaipeda
Joniskis
Latvia
Sea terminal Butinge Orlen Lietuva
Refinery
Lithuania
Illukste
Biržai
Sea terminal Ventspils(20,0 mt/y)
(14,0 mt/y)
(16,4 mt/y)
Klaipeda(9,0 mt/y)
Polock
� Concentration on cash flow improvement
� Reduction in overhead and employment costs below USD 10 m monthly and efficiency initiatives will improve the result by over 1 USD/bbl
� Capex optimization to the level below USD 20 m annually
� Improvement in sales efficiency and increase in capacity utilization, including considered crude oil throughput service
� Releasing of cash frozen in assets
� In worsening of macro situation ready to temporary refinery shut down
1616
Unipetrol – continuation of operating efficiency improvement
� Speed up of Operational Excellence Initiatives in Ceska Rafinerska
� Refining and retail sales enhancement upon grey zone limitation
� Investing in synergies between refining and petchem segments
� Regulatory affairs management in the area of renewable energy sources fee, fuels grey zone limitation and biofuel burdens
� Retail segment market share increase and non-fuel sales increase driven by expected economic recovery
KEY FACTS
ASSETS
IKL
Pipeline10 mt/y
CEPRO production pipelines
Mero Crude oil pipelines
CEPRO depots
Kralupy
3.2 mt/y
Pardubice *
1.0 mt/y
Litvínov
5.5 mt/y
Druzhba
pipeline9 mt/y
* Paramo refinery in Pardubice closed permanently and does not process crude oil since 3Q 2012. The production of bitumen and lubes was not affected.
17
Dividend
� Our target is to pay dividend regularly
� We paid:
�PLN 1.50 per share (in 2013)
�PLN 1.44 per share (in 2014)
� We plan to increase dividend per share gradually while
maintaining safe financial ratios.
1818
This presentation (“Presentation”) has been prepared by PKN ORLEN S.A. (“PKN ORLEN” or “Company”). Neither the Presentation nor any copy hereof may be copied,
distributed or delivered directly or indirectly to any person for any purpose without PKN ORLEN’s knowledge and consent. Copying, mailing, distribution or delivery of this
Presentation to any person in some jurisdictions may be subject to certain legal restrictions, and persons who may or have received this Presentation should familiarize
themselves with any such restrictions and abide by them. Failure to observe such restrictions may be deemed an infringement of applicable laws.
This Presentation contains neither a complete nor a comprehensive financial or commercial analysis of PKN ORLEN and of the ORLEN Group, nor does it present its position
or prospects in a complete or comprehensive manner. PKN ORLEN has prepared the Presentation with due care, however certain inconsistencies or omissions might have
appeared in it. Therefore it is recommended that any person who intends to undertake any investment decision regarding any security issued by PKN ORLEN or its subsidiaries
shall only rely on information released as an official communication by PKN ORLEN in accordance with the legal and regulatory provisions that are binding for PKN ORLEN.
The Presentation, as well as the attached slides and descriptions thereof may and do contain forward-looking statements. However, such statements must not be understood as
PKN ORLEN’s assurances or projections concerning future expected results of PKN ORLEN or companies of the ORLEN Group. The Presentation is not and shall not be
understand as a forecast of future results of PKN ORLEN as well as of the ORLEN Group.
It should be also noted that forward-looking statements, including statements relating to expectations regarding the future financial results give no guarantee or assurance that
such results will be achieved. The Management Board’s expectations are based on present knowledge, awareness and/or views of PKN ORLEN’s Management Board’s
members and are dependent on a number of factors, which may cause that the actual results that will be achieved by PKN ORLEN may differ materially from those discussed in
the document. Many such factors are beyond the present knowledge, awareness and/or control of the Company, or cannot be predicted by it.
No warranties or representations can be made as to the comprehensiveness or reliability of the information contained in this Presentation. Neither PKN ORLEN nor its directors,
managers, advisers or representatives of such persons shall bear any liability that might arise in connection with any use of this Presentation. Furthermore, no information
contained herein constitutes an obligation or representation of PKN ORLEN, its managers or directors, its Shareholders, subsidiary undertakings, advisers or representatives of
such persons.
This Presentation was prepared for information purposes only and is neither a purchase or sale offer, nor a solicitation of an offer to purchase or sell any securities or financial
instruments or an invitation to participate in any commercial venture. This Presentation is neither an offer nor an invitation to purchase or subscribe for any securities in any
jurisdiction and no statements contained herein may serve as a basis for any agreement, commitment or investment decision, or may be relied upon in connection with any
agreement, commitment or investment decision.
Disclaimer
1919
For more information on PKN ORLEN, please contact Investor Relations Department:
phone: + 48 24 256 81 80fax: + 48 24 367 77 11e-mail: [email protected]
www.orlen.pl