LOTOS Group Proposed Rights Issue 1 September 2014 LOTOS Group
Background of the proposed capital increase upstream downstream 2006 - 2014 Upstream The 10+ Program Expansion of the diversification: created one of the most wholesale and retail development of a complex refineries in market…
On September 8th, 2014 the EGM will decide on the proposed capital increase Basic parameters of the capital increase set out in draft resolution Proposed issue of up to 55m new shares Proceeds from the issue expected at around PLN 1…
Economic rationale for the transaction Proceeds from capital increase of ca. PLN 1 bn are to finance the Company's attractive investment projects, in particular Delayed Coking Unit (DCU) and the development of gas fields B4 / B6…
Grupa LOTOS: key success factors Strategically located highly sophisticated refinery One of two refineries supplying the largest fuels market in Eastern Europe with long term growth prospects 1 Coastal position in the Baltic provides…
Current status Milestone for B8 Project development (financing) UPSTREAM Planned development of B4 & B6 gas fields Evaluating further acquisition opportunities on the Norwegian Continental Shelf following Heimdal package…
Successful execution of strategy Downstream: LOTOS refinerys capacity extension in 2011 by 75% (up to 10.5m tpa) 34% domestic overall fuel market share as at 30 June 2014(1) PAST Retail: over 400 service stations in Poland…
DOWNSTREAM Key elements of strategy LOTOS Group 9
DCU Further efficiency upgrade of the rafinery Post completion of the 10+ Program, Grupa LOTOS S.A. still produces 2 mtpa of heavy products (bitumens, high sulphur fuel oil) Produced heating oil contains on average 20% of middle…
DCU Significant Improvement of Products Yield Product yield following implementation of DCU (% product) 60 52 +8pp 21 22 18 -12pp 6 3 4 4 Light products Middle distilates Heavy products Coke Other Notes: Decrease…
Hydrogen Recovery Unit (HRU) Additional annual production from HRU (k tons) +50% 100 Increase of hydrogen available in the refinery by recovery from refining gases - increase of refining margin Replacing high margin products +4%…
Marketing Main achievements Future goals Retail market share increase Further petrol station network expansion in domestic market Domestic market development in fuels and lubricants 10% share in retail market to be achieved…
UPSTREAM Key elements of strategy LOTOS Group
E&P Strategy Poland: Trondheim offshore: development of existing fields and fully exploit exploration potential of the Baltic Sea Helsinki onshore: aiming at gaining control over Bergen new assets Norway: Oslo Stockholm…
Poland: Intensification of works in the Baltic Sea in order to fully exploit exploration potential 2014-2015 B8 field development, first oil scheduled for in Q4 2015, production potential: 3.5 million t, cooperation with PIR (Polish…
Norway: Heimdal Acquisition December 2013 Heimdal acqusition 3 producing, 3 development fields, 1 hub 5.000+ boe/d production net 14 licenses / operator in Fulla development USD 175.8m acquisition price USD 80m (45%) of the…
2015 Planned potential production: 24 k tons boe/day Strategy implementation plan 30 24 25 Daily production (k tons boe/day) 20 15 10.4 9.4 10 5.7 4.7 5 0 2011 2012 2013 2014 2015 TOTAL CAPEX FOR UPSTREAM IN…
Summary Advantaged refinery exposed to growing market with investment plans to enhance configuration and complexity developing a better balanced portfolio with greater exposure to E&P Proposed capital increase to provide…
Appendix 1. DCU project LOTOS Group 20
DCU Key benefits of the project and its status Estimated CAPEX EUR 500 m Key benefits: attractive economics compliance with the strategic goal of LOTOS Group improvement of competitiveness of LOTOS Group increase in value of LOTOS…
DCU Project structure Due to the structure of the balance sheet, Grupa LOTOS S.A. limitations arising from 10+ Program financing and investment risks, a substantial part of the Project will be executed by LOTOS Asphalt, with…
DCU rationale Growing environmental requirements towards heavy fractions Reduction of sulphur content in bunker fuels to 0.5% from 2020/25 in EU waters beyond SECA % 5.0 4.5 Decision on the choice Scenario with 4.0 of scenario 2018…
DCU 100% benefits for the issuer Due to the limited financial capacity of LOTOS Group, in the absence of the capital increase, attracting of external JV investors will be necessary The investors' participation in the project,…
Appendix 2. B4/B6 field development LOTOS Group 25
Gas fields B4&B6 Project Fields development and exploitation together with an experienced partner(Cal Energy) Expected output B4/B6 (LOTOS Petrobaltic share, 51%) : ca. 200 m m3 / year (eq. 3.5 thous. boe/d) Assumed financing…
Basic information and business rationale Business rationale for the project Additional upstream margin on gas projects B4 Economies of scale in the Baltic Sea Support for Polish energy security B6 B3 The diversification of gas…
B4&B6 timetable Project schedule B4 field (1) development concept approved 1Q 2014 B6 field (2) engineering project (FEED)(1) 2Q 2014 1Q 2015 (3) investment decision (FID)(2) 1Q 2015 (4) implementation of development 2015 2017…
Appendix 3. Other key development projects LOTOS Group 29
Other key development projects upstream downstream Development of the B8 field Hydrogen Recovery Unit First production expected in 4Q 2015 Additional production of LPG, naphta and hydrogen Total production capacity according to…
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