Predicted accounting one-off which impacts significantly financial data for 2023 presented in financial statements for 2023

ORLEN S.A. (“ORLEN”, “Company”) informs that it predicts to recognize in the financial statements for 2023 the impact of discontinuing cash flow hedge accounting for a separated portfolio of futures transactions hedging the exposure associated with the contract for the purchase of liquefied natural gas (“LNG”) by ORLEN from Venture Global Calcasieu Pass, LLC ("VGCP Portfolio").

Based on a long-term contract with Venture Global Calcasieu Pass, LLC ("VGCP Agreement"), ORLEN, as the legal successor of PGNiG S.A. (“PGNiG”) was to receive for 20 years, 1.5 million tons of LNG (ca. 23 TWh) annually in the Free on Board formula at the Calcasieu Pass LNG terminal in the USA. Within the VGCP Portfolio there was hedged a spread between LNG purchase from Venture Global Calcasieu Pass, LLC at Henry Hub index prices and further sales of gas, limited by the purchased volumes, at European gas indices prices correlated with the TTF index.

Derivatives assigned to the VGCP Portfolio were designated by the Company as hedging instruments in cash flow hedge accounting. As a result in the subsequent periods ORLEN recognized in equity the part of gains or losses on hedging instruments in VGCP Portfolio that effectively hedged the risk.

Up until now no delivery of LNG under the VGCP Agreement has been made. Due to the further delays of the start of LNG deliveries from the Calcasieu Pass terminal, ORLEN concluded that as of 31 December 2023 it cannot expect the realisation of the hedged cash flows from the hedging instruments within the VGCP Portfolio. In connection to that ORLEN reclassified the cumulated gains and losses on the hedging instruments within the VGCP Portfolio from equity to financial result, as a result of which the ORLEN’s Group EBITDA and the Company’s EBITDA for 2023 will increase by ca. PLN 7,2 bn. Reclassification refers to the derivatives settled in the earlier reporting periods of 2023 in the amount of ca. PLN 5,3 bn, and in the remaining part mainly to valuation of derivatives that will terminate in the coming months of 2024.

Due to the taxation on the settlement of the derivatives, according to the regulations of the Act on corporate income tax, the net result of ORLEN’s Group and net result of the Company for 2023 will increase by ca. PLN 5,8 bn.

ORLEN will publish its standalone and consolidated financial statements for year 2023 on 25 April 2024.