Revenue posted by the PGNiG Group in the first half of 2013 was close to PLN 16.8bn, up 14% on the same period of the previous year, as sales of crude oil doubled and sales of gas went up 10%. At the operating level, the Group reported strong EBITDA growth (by 225%) to over PLN 3.3bn (compared with PLN 1bn in H1 2012), chiefly on the back of improved results across all business segments.

In the second quarter of 2013, the Group recorded PLN 354m in net profit, against net loss of PLN 262m in the corresponding period of 2012. Q2 2013 revenue grew 12% to PLN 6.5bn, year on year, lifting EBITDA nearly 500%, to PLN 1.36bn.

"A major driver of the Group's financial performance was the launch of petroleum production from our two key projects. This goes to reinforce our conviction that we should further intensify our focus on the upstream area," stressed Jerzy Kurella, acting President of the PGNiG Management Board. "Another positive trend to note was the improved performance across all the remaining business segments. This is very important considering the challenges which lie ahead of us, especially the imminent market deregulation, for which we are busily preparing."

Exploration and Production segment - Strong earnings growth

Revenue from the Exploration and Production segment for the first half-year of 2013 came in at PLN 2.76bn, a year-on-year increase of 35%, which translated into EBITDA of PLN 1.8bn, up 62% on the same period last year.

The segment's robust performance was mainly led by the doubling of crude oil sales, combined with rising inter-segment gas sales from the Skarv field in Norway to PGNiG Sales & Trading. This result also confirmed that our investment in oil and gas production was a good decision.

The Group's oil and condensate production in the first half of 2013 went up to 462 thousand tonnes, from 223 thousand tonnes in the first half of 2012. At the same time, oil and condensate sales went up 102% to nearly 450 thousand tonnes, delivering revenue of PLN 1.1bn - up from PLN 594m in the corresponding period of 2012.

The volume of gas produced in the second quarter of 2013 amounted to 1.1 billion cubic metres, on a par with the previous year's level.

Reduction of negative margin on gas sales

The lower price of gas purchased under the revised Yamal contract (renegotiated in 2012) benefited the performance of the Trade and Storage segment. Its H1 2013 EBITDA came in at PLN 115m, a marked improvement from the negative EBITDA of nearly PLN 1.4bn in the corresponding period of 2012. EBITDA also improved in the second quarter of 2013 to PLN 116m, from the negative EBITDA of PLN 624m in the same quarter of 2012. This resulted from a 19% drop in the cost of gas sold, which however was not enough to drive the margin on sales of high-methane gas into positive territory. However, at minus 2% in the first half of 2013, it showed an improvement relative to minus 11% in the first half of 2012. The average tariff price was still insufficient to cover the cost of gas.

Gas sales went up 10% year on year, to some 8.8 billion cubic metres in the first half of 2013. Looking at gas sales by customer group, a significant change was posted in the Refinery segment which is attributable to the contract with Grupa LOTOS. The Trade and Services segment and the Retail Customer segment both saw the effect of low air temperatures in March and the expanded scale of PST's operations in Germany, which showed up in its H1 2013 revenue of some PLN 1bn.

"Our financial standing is stable and the Group is keeping its debt at a comfortably low level, while optimising the use of its funding sources," says Jacek Murawski, Vice-President of the PGNiG Management Board, Finance. "We have more funds available under the existing programmes, amounting to PLN 11.7bn. Accordingly, net debt to trailing EBITDA was below 1 as at the end of the first half-year 2013, which bodes well for our investment plans and the dividend payment planned for October of this year".

PGNiG Group performance in H1 2013 (PLNm)

	H1 2012	H1 2013	Change
Revenue	14,764	16,790	2,026
Operating expenses	(13,738)	(13,454)	(284)
EBITDA	1,026	3,336	2,310
EBIT	22	2,174	2,152
Net profit/(loss)	45	1,428	1,383

PGNiG Group performance in Q2 2013 (PLNm)

	Q2 2012	Q2 2013	Change
Revenue	5,818	6,535	717
Operating expenses	(6,108)	(5,176)	(932)
EBITDA	228	1,360	1,132
EBIT	(321)	746	-
Net profit/(loss)	(262)	354	-

Higher volumes of distributed gas driving up the Distribution segment's performance

The Distribution segment's EBITDA for H1 2013 was in excess of PLN 1bn, having risen 9% year on year. This solid performance was spurred by an 8% growth in the volumes of gas distributed both in H1 and Q2 2013, following the connection of around 23 thousand new customers to the grid. Furthermore, the segment saw an improvement in revenue from sales of distribution services, by 24% and 19% respectively, in the second quarter and first half of 2013.

Sound performance by the Generation segment despite falling energy prices

In the first half of 2013, a nearly 5% year-on-year growth was recorded in heat sales (to 24 PJ), with electricity sales staying flat at 2.1 TWh. In the same period, revenue from heat sales rose by 14% to PLN 600m, with revenue from electricity sales up by 11% to PLN 485m. The increase in revenue from electricity sales was driven by a higher sales volume (up 103 GWh) and a steady rise in revenue from electricity trading.

Record high utilisation of gas storage capacities

In the first half-year of 2013, the utilisation rates of the Group's underground gas storage capacities were at an all-time high. The volume of high-methane gas injected into storage was close to 1.8 billion cubic metres. By comparison, that figure in H1 2012 was 1.5 billion cubic metres. Also, the first gas was injected into the Wierzchowice underground storage facility, and we may have as much as 2.4 billion cubic metres of gas stored before the next winter season.

Joanna Zakrzewska

Press Officer