Letter from the President of the Management Board

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Ladies and Gentlemen,

I am pleased to present the PGNiG Group’s Annual Report for 2015.

Financially, 2015 was a good year – our operating profit of PLN 3.3bn translated into a net profit of PLN 2.1bn, with EBITDA coming in at PLN 6.1bn. We more than satisfied the statutory obligation to sell a specific volume of gas by auction or on the exchange market. The Company has retained its investmentgrade rating, as confirmed by Moody’s Baa3 score with a stable outlook. The available financing will allow us carry out our investment plans in 2016.

Following the collapse of crude oil prices on global markets, last year was a difficult time for all companies in the oil and gas industry. Despite an unfavourable business climate and regulatory pressures, the PGNiG Group has maintained its robust market position and improved performance in the distribution and generation segments.

Our strategy was consistently implemented. Thanks to further acquisitions in Norway, the PGNiG Group now holds 18 licences on the Norwegian Continental Shelf. Over the past year, the production of gas, oil and NGLgrew by nearly a half – to 8.5 million barrels of oil equivalent. Our activities on the North Sea are benefiting the Group and offering prospects for the future, as the Management Board is working to best leverage our success in Norway.

PGNiG’s import book requires a new strategy for procuring gas after 2022, and Norway appears to be the most promising source. At the same time, we are thoroughly analysing the possible use of LNG supplies. Both options were taken into account in the Group’s updated strategy.

With its customers in mind, PGNiG has been pursuing an amendment to the prices of imported gas through an arbitration procedure. Given the growing competitive pressures on the domestic market, PGNiG must take special care to secure low purchase prices.

The task currently facing the Management Board is to adapt the Company’s structure to the updated strategy. The Efficiency Improvement Programme and efforts to further professionalise our operations in each segment will be continued.

In the coming year, we will seek to strengthen our position on the Polish and European energy markets through value creation efforts. I would like to thank our Customers and Shareholders for the trust they have placed in us.

Kind regards,

Piotr Woźniak
President of the PGNiG Management Board

Polish Oil and Gas Company (PGNiG)
KRS 0000059492, NIP 525-000-80-28, share capital 5 900 000 000 PLN - fully paid
PGNiG Head Office 25 M. Kasprzaka St., 01-224 Warsaw
Phone: +48 22 589 45 55, fax : +48 22 691 82 73