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In the same period, the Group reported revenue of just over PLN 9.5bn, down 7% from PLN 10.3bn in Q1 2013. The fall was due to higher than average air temperatures in comparison with the corresponding period of 2013.

At the operating level, the Group recorded a year-on-year growth in EBITDA of 10%, to approximately PLN 2.2bn, against PLN 1.98bn in Q1 2013. With a 51% share, the Exploration and Production segment was the largest contributor, followed by Distribution with a 28% share, and the Trade and Storage and Generation segments, each accounting for 10% of the total.

Exploration and Production segment - earnings growth

Revenue from the Exploration and Production segment for Q1 2014 was in at PLN 1.62bn, a year-on-year increase of 17%, translating into EBITDA of PLN 1.13bn, up 24% on the same period last year.

The segment's robust performance was led by a substantial increase in crude oil sales of 38%, combined with higher inter-segment sales of gas from the Norwegian fields to PGNiG Sales & Trading, which was more than double the figures of the previous year.

The Group's oil and condensate production in Q1 2014 increased considerably by 45% to 322 thousand tonnes - up from 229 thousand tonnes in Q1 2013. At the same time, oil and condensate sales were up at 287 thousand tonnes, delivering revenue of PLN 690m - up 30% on Q1 2013.

In Q1 2014, production of gas measured as high-methane equivalent was broadly flat on Q1 2013, at 1.2 billion cubic metres (including 1.1 billion cubic metres produced in Poland).

Positive margin on gas sales

The Trade and Storage segment's performance in Q1 2014 was driven by declining gas prices on European exchanges, which brought down the cost of gas volumes linked to these markets. As a result, margin on high-methane gas sales was positive at 3% in Q1 2014, against a negative margin of -3% in the same period last year. The segment's revenue contracted by 7%, to PLN 7.95bn.

In Q1 2014, sales of gas fell more than 12%, to 4.9 billion cubic metres, relative to 5.6 billion cubic metres in the same period of 2013. This was chiefly on the back of the mild winter weather and reduced gas consumption at CHP plants due to lack of legislative support for co-generation. By customer category, increased gas sales were only seen for customers of PGNiG Sales & Trading. Sales of gas on the German market, through PST, grew 2.2%, to 0.46 billion cubic metres in Q1 2014.

PGNiG Sales & Trading's share in total gas revenue was stable, at PLN 0.6bn. Another positive contributor was nearly a three-fold rise in revenue from electricity sales to PLN 0.47bn in Q1 2014, from PLN 0.16bn in Q1 2013.

PGNiG Group's performance in Q1 2014 (PLNm)

Effect of higher air temperatures on the Distribution segment

In Q1 2014, the Distribution segment recorded a 11% decline in revenue, down to PLN 1.26bn, as its gas distribution volumes dropped 17% - to 3.22 billion cubic metres. The weaker performance was attributable to the warm weather, with average air temperatures 4°C higher relative to the corresponding quarter of 2013.

Mild winter weather and electricity prices impact sales in the Generation segment

In Q1 2014, the Generation segment posted PLN 650m in revenue, down 14% year on year, which was attributable to lower heat and electricity sales caused by high air temperatures, coupled with falling electricity prices.

Sales of electricity from the Group's own generation sources fell 9%, to 1.39 TWh, in Q1 2014, while sales of heat were at 15.4 PJ, having fallen by 17%.

Utilisation of gas storage capacities

The stocks of high-methane gas held in underground storage at the end of March 2014 was approximately 1.26 billion cubic metres, relative to 1.22 billion cubic metres in March 2013.

Dorota Gajewska

Press Officer