PKN ORLEN prepares for sale of another portion of oil stocks
Today PKN ORLEN has repurchased a pool of mandatory reserves sold a year ago, and is preparing a new deal, which stands a chance of being finalised by the end of the first half of 2013.
An annual contract on building and maintaining mandatory oil reserves, under which PKN ORLEN outsourced maintaining the mandatory reserves to an external partner, Ashby Sp. z o.o., expires today. In accordance with its terms, today PKN has repurchased the reserves from Ashby and has taken over their ownership.
The transaction value of approximately USD 400m, including settlement of the forward contract hedging the purchase price of oil, is close to the amount of proceeds received from the sale of the oil a year ago. As a result, approximately PLN 1.3bn will be posted under "stocks" for the first quarter of 2013. In addition, throughout the term of the contract, Ashby paid a fee to PKN ORLEN for guaranteed maintenance of the reserves, which significantly reduced the cost of the reserves maintenance incurred by the Company.
"Work is well advanced on another deal, and we hope to finalise it by mid-year. It will be the fifth transaction of this type since we changed the method of maintaining mandatory reserves of oil in 2010. The successful implementation of this solution, which is yet to be replicated on the Polish market, is underpinned by the reliability of our company and the trust placed in us by our partners. We continue using the legally permitted methods of holding mandatory reserves in order to tap the funds frozen in the reserves and use them in a more effective manner," said Sławomir Jędrzejczyk, Vice-President of the Management Board and Chief Financial Officer at PKN ORLEN.
Another contract concerning mandatory reserves, executed in December 2012 with Whirlwind, will continue in force until January 28th 2014. Whirlwind provides services to PKN ORLEN which involve maintaining roughly 18% of its total pool of mandatory reserves of REBCO oil (545 thousand tonnes).
