PGNiG: PGNiG Management Board’s financial guidance for 2014

Current Report No. 24/2014 The Management Board of PGNiG S.A. (“PGNiG”, the “Company”), with a view to streamlining the Company’s stakeholder communication, presents its financial forecast based on the business plans of the PGNiG Group companies and operating assumptions.
The 2014 forecast covers:1. Consolidated revenue of the PGNiG Group – forecast at ca. PLN 32.7bn;2. Consolidated EBITDA of the PGNiG Group – forecast at ca. PLN 5.9bn;3. Debt/EBIDTA ratio of the PGNiG Group – forecast at no more than 2.0x.
This forecast is based on the following assumptions for 2014:
a) Production of crude oil and condensate: ca. 1.18m tonnes;
b) Production of natural gas (high-methane gas equivalent): ca. 4.5bcm;
c) PGNiG’s volume of gas sales on the Polish market: ca. 14.4bcm;
d) Gas price on the TTF exchange: EUR 26/MWh;
e) Brent oil price: USD 100/bbl;
f) PGNiG Group’s capital expenditure (net of M&A spending): ca. PLN 4.5bn, including:
- In the Exploration and Production segment: PLN 1.9bn.The PGNiG Group intends to allocate the largest amount of capital expenditure to the exploration for and production of hydrocarbons. PGNiG’s exploration capex will be almost PLN 0.9bn. The work in Poland will include drilling of 33 wells, with ten in shale prospects. Almost PLN 0.7bn will be spent on extending and upgrading hydrocarbon extraction facilities, mainly producing wells. The balance of PLN 0.4bn represents the capital expenditure of subsidiaries, including Exalo Drilling, and companies conducting exploration work abroad- In the Trade and Storage segment: PLN 0.7bn.The segment’s key project will be the extension of underground gas storage facilities, principally in the Mogilno and Kosakowo caverns. By the end of 2014, the capacity of gas storage facilities is to increase by 200mcm (Husów and Kosakowo).
- In the Distribution segment: PLN 1.2bnThe expansion and upgrading of the gas distribution network is the key focus for capex in the segment, with nearly PLN 650m allocated to development projects, including new network connections.
- In the Generation segment: PLN 0.7bnInvestment in electricity and heat generation will increase significantly – by more than 170% on 2013.The EBITDA forecast for 2014 will be monitored by PGNiG at times of release of interim reports, based on management data. The Group’s ability to meet the forecast targets will be reviewed and any necessary revisions will be made in the same manner. The review will be based on actual results delivered in particular ended periods, taking into account seasonal fluctuations in financial performance throughout the year and the Group’s risk factors.As the fulfilment of this forecast depends on a number of variables, actual results may differ from the projections. Certain factors, such as gas prices on the exchange and per-barrel prices of Brent crude, are beyond the Company’s control. In the event of any material deviations from the 2014 financial forecast, PGNiG will adjust its projections and publish the amended guidance. No such publication will be made, however, if the variances do not cause any significant changes to the forecast.