PGNiG: Recognition of material impairment losses and write-downs at the PGNiG Group

The Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA (“PGNiG”) announces that as at December 31st 2014 PGNiG recognised impairment losses/write-downs and made write-offs of costs related to its tangible assets under construction, production assets and natural gas inventories, which will reduce the PGNiG Group's operating result for Q4 2014 by approximately PLN 627m.
The amount comprises:
i) tangible assets under construction related to the exploration for and evaluation of mineral resources: PLN 324m, including dry wells written off: PLN 156m (Exploration and Production segment),
ii) hydrocarbon production assets: PLN 235m (Exploration and Production segment),
iii) methane-rich gas inventories: PLN 68m (Trade and Storage segment).
Impairment losses are recognised after the periodic assessment of recoverable amounts of assets. PGNiG recognised impairment losses on production assets and assets related to exploration for and appraisal of mineral resources based on future cash flow analysis, which accounted for current trends in product prices, expected regulatory changes (including tax regime changes), and updated, long-term production forecasts. The need to recognise impairment losses was identified only with respect to assets located in Poland.
The write-down of methane-rich gas inventories was driven by two factors: (i) the loss of calorific value of gas at the Wierzchowice underground gas storage facility, and (ii) market valuation of methane-rich gas inventories based on forecast selling prices.
The data presented in this report are estimates only and may differ from the actual figures, which will be released on March 5th 2015 in an interim report.