Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN") informs that on 29 January 2015 the agreement for gathering and keeping of crude oil obligatory inventories (“Agreement”), concluded on 27 June 2013 between PKN ORLEN and Neon Poland Sp. z o.o. („Neon”), has expired.

Due to the abovementioned and realization of the Act of 16 February 2007 on stocks of crude oil, petroleum products and natural gas, the principles of proceeding in circumstances of a threat to the fuel security of the State and disruption on the petroleum  market (Journal of Laws 2014, item 1695) PKN ORLEN purchased crude oil owned by Neon. The value of transaction amounts to ca. USD 145 m (i.e. ca. PLN 540 m). The crude oil price was established according to market quotations.

Transfer of payment by PKN ORLEN and transfer of crude oil ownership to PKN ORLEN was made on 29 January 2015.

On the day of conclusion of the Agreement, PKN ORLEN hedged purchase price of crude oil and currency with futures contracts. Through the settlement of the hedging transactions purchase price of crude oil will be increased by ca. USD 112 m (i.e. ca. PLN 419 m). As a result of these operations PKN ORLEN will recognize in the first quarter 2015 purchase of crude oil in the amount  of ca. USD 257 m  (i.e. ca. PLN 959 m).

Additionally within the period of the agreement of gathering and keeping of crude oil obligatory inventories Neon made payments to PKN ORLEN for guaranteeing of inventories storage.

All amounts presented in the announcement do not include VAT and have been calculated based on the average USD/PLN exchange rate as of 28 January 2015, as stated by the National Bank of Poland.

Neon is a SPV, established at the request of RBS Polish Financial Advisory Services Sp. z o.o., which is a subsidiary of Royal Bank of Scotland plc. Neon in its statutory activities includes turnover of crude oil.

See also: regulatory announcement no 240/2013 dated 27 June 2013.