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 June 30th 2015, PGNiG recognised impairment losses and made write-offs of costs related to its production assets and tangible assets under construction, which will reduce the PGNiG Group’s operating result for Q2 2015 by an aggregate amount of approximately PLN 377m.
The amount comprises:
i) tangible assets under construction related to the exploration for and evaluation of mineral resources: PLN 266m, including seismic surveys and dry wells written off: PLN 175m (Exploration and Production segment),
ii) hydrocarbon production assets: PLN 111m (Exploration and Production segment).
Impairment losses were 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.
In Q2 2015, a write-down on inventories of high-methane natural gas of PLN 25m was reversed. As at June 30th 2015, the balance of the write-down was PLN 19m and resulted from the loss of calorific value of gas stored in the Wierzchowice underground gas storage facility.
The data presented in this report are estimates only and may differ from the actual figures, which will be released on August 14th 2015 in an interim report.