In Q3 2014, LOTOS generated revenue of close to PLN 7.55bn, up by approximately 5% on the previous quarter. Revenue for the period from January 1st to September 30th 2014 totalled in excess of PLN 21.9bn (up 4% year on year).

The Q3 2014 financial performance was driven by a downward trend in market prices of crude oil, affecting the valuation of crude consumption, coupled with a rise in the USD/PLN exchange rate, which led to foreign exchange losses from operating activities and drove up the cost of USD-denominated debt.

Operating profit for Q3 2014 came in at nearly PLN 80m. The EBIT figure net of one-off events was PLN 144.6m, while the Q3 2014 EBIDTA stood at PLN 283.5m.

State Treasury to acquire new issue shares

On October 15th 2014, acting as the State Treasury representative, Minister of the State Treasury entered into an agreement with Grupa LOTOS S.A. for assistance in the form of non-public aid of up to PLN 530m to finance the construction of a Delayed Coking Unit (DCU) and auxiliary installations (‘EFRA Project’). Under the agreement, the State Treasury will exercise its pre-emptive rights and take up new shares in Grupa LOTOS.

On September 8th 2014, the Extraordinary General Meeting of Grupa LOTOS S.A. approved the increase of the Company’s share capital through the issue of new shares. The new shares will be offered to the Company’s existing shareholders. Grupa LOTOS expects to raise approximately PLN 1bn through the issue. The proceeds will be used to finance the Company’s strategy, which envisages further investments to increase the refinery’s complexity and step up hydrocarbon production.

Norwegian assets boost revenue

The upstream segment’s revenue for Q3 2014 totalled PLN 198m, up by approximately 81% year on year, mainly on the back of production and sales of condensate and gas from the Heimdal assets in the Norwegian North Sea acquired in 2013, as well as increased sales of Rozewie crude.
In Q3 2014, LOTOS Petrobaltic continued to produce crude oil from the B3 field. In the period under review, the company filed an application with the Ministry of the Environment for an oil and gas exploration and appraisal licence within the Młynary area, together with the related plan of geological operations, as well as applications for amending the terms of three oil and gas exploration and appraisal licences: Sambia E, Łeba and Gaz Południe. In August 2014, LOTOS Petrobaltic completed drilling the B21-2 appraisal well in the Gaz Południe licence area.

In Q3 2014, AB LOTOS Geonafta and UAB Genciu Nafta, the Lithuanian subsidiaries of Grupa LOTOS, produced crude oil from 17 onshore fields, including Genciai, Girkaliai, Kretinga, Nausodis and Genciu.

Refinery capacity utilisation above 90%

In Q3 2014, the Gdańsk refinery’s utilisation was adjusted to accommodate market conditions. The refinery’s capacity utilisation rate in the period was 91.3% (up by 0.5pp quarter on quarter). With its operations stable, the refinery maintained crude throughput of 2,416 thousand tonnes (up by 0.8% quarter on quarter).

According to the Polish Organisation of Oil Industry and Trade, in the first eight months of 2014 consumption of liquid fuels in Poland fell by 2.3% year on year. In the eight months to August 31st 2014, LOTOS secured a 33.5% share in the shrinking domestic market for liquid fuels. In line with the objectives set in its strategy for 2011−2015, the Group will seek to maintain its share in the domestic fuel market at 30% or more until 2015.

Growing retail EBIT

At the end of Q3 2014, there were 432 service stations operating under the LOTOS brand. As part of the efforts designed to optimise the station chain, a new brand of economy stations under the trade name LOTOS OPTIMA was launched on the Polish market in 2011. As at September 30th 2014, the number of LOTOS OPTIMA stations was 160 (106 CODO stations and 54 DOFO stations), with 33 new outlets added to the chain from the year before.

In the period under review, the downstream segment's operating profit grew 763% quarter on quarter and 323% year on year, to PLN 23.3m, with the growth mainly attributable to effective solutions implemented to optimise the network’s operations.

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

Legal disclaimer:

This material is not for release, publication or distribution, directly or indirectly, in the United States, Australia, Canada, and Japan.

This material has been prepared by Grupa LOTOS S.A. (“Company”) for promotional purposes only, it does not constitute an offer or a solicitation of any offer, and it is not to be relied on in making investment decisions to buy the Company’s securities. A prospectus to be prepared in connection with the rights issue and public offering of the Company shares (“Shares”) (“Prospectus”), after its approval by the Polish Financial Supervision Authority, will be the only legally binding document containing information on the Company and the public offering of its Shares in Poland. The Prospectus will be made public in electronic form on the Company’s website (www.lotos.pl) and, for information purposes, on the website of Powszechna Kasa Oszczędności Banku Polskiego S.A. Oddział − Dom Maklerski PKO Banku Polskiego w Warszawie (www.dm.pkobp.pl)

This material is not a recommendation within the meaning of the Minister of Finance’s Regulation on information which constitutes recommendations concerning financial instruments or their issuers, dated October 19th 2005.

This material (and any information presented herein) does not contain or constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States of America, Australia, Canada, Japan or in any other jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (“US Securities Act”), and they may not be offered or sold in the United States unless they are registered under the US Securities Act or unless they are exempted from the registration requirements of the US Securities Act. The securities will not be publicly offered in the United States.

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