Acquisition of upstream assets on the Norwegian Continental Shelf Zbigniew Paszkowicz, Vice President of the Management Board of Grupa LOTOS and CEO of LOTOS Petrobaltic Wojciech Kowalczyk, CEO of LOTOS Norge Piotr Dąbek, Business Development Director, LOTOS Petrobaltic November 2nd, 2015
Acquisition of producing assets in Norway New phase of LOTOS E&P business development Business Rationale Strengthening position of LOTOS E&P business Recovery of invested capital Cooperation with experienced partners Producing assets in place with reliable track record Stable and secure business environment Financial& Operational Results Full recovery of the capital frozen in the tax assets Financial stability for the new Strategy perspective 2016-2020 Achieving strategic production target (24 kboe/d FYE 2015) (1) Increase of LOTOS reserves and resources (1) Thousand barrels of oil equivalent per day as of 31 December 2015 2
Consistent execution of E&P strategic development Heimdal transaction Purchase of assets from Centrica 2013 2014 Sleipner transaction Purchase of assets from ExxonMobil E&P Norway AS Agreement subject to customary approvals by Norwegian authorities 30.10.2015 Heimdal + Sleipner Strong foothold for LOTOS E&P business Production from Heimdal assets above forecasts from the moment of purchase Stable cash flows coming from Heimdal strongly supporting the overall profitability of the upstream segment 3
Sleipner transaction asset overview Gas and condensate fields in the Central North Sea 4 producing fields share 15% Sleipner East with satellites fields Loke and Gungne Sleipner Vest 1 field for future development share 18% Alfa Sentral, Concept Select phase All fields operated by Statoil Gas exported to Europe and the UK, condensate transported to Karsto terminal (Norway) for refining Sleipner Trondheim Norway Bergen Oslo Karsto Stavagner liquids UK Belgium Germany Danmark gas 4 4
Sleipner high quality and strategic importance Central hub for gas exports from the Norwegian continental shelf to Europe and the UK Second largest gas asset in the North Sea (distribution of 40% Norwegian gas exports) Production from own fields and host for 3rd party tie-ins (Sigyn, Volve, Gudrun and from 2017 Gina Krogh) Gas processing expected up until 2032 High quality of assets confirmed in due diligence i.e. reliable track record, no significant shutdowns and high availability of installations 5
Sleipner transaction licensees structure Sleipner East Statoil, operator 59,6% Exxon 15,4% LOTOS Norge 15,0% Total 10,0% Sleipner Vest Unit Statoil, operator 58,35% Exxon 17,24% LOTOS Norge 15,0% Total 9,41% Alfa Sentral (Nor. part) Statoil, operator 62,0% LOTOS Norge 28,0% Total 10,0% 28% in NCS part = 18% effective share in the field (1) Fields located within 5 licences: PL 046 (inside and outside), PL 029, PL 046D, PL 046E (1) Field geographically divided between Norway and UK 6
Sleipner reserves and resources (1) m boe 20.8 17.6 Alfa Sentral Sleipner East, Loke, Gungne Sleipner West 2P Proved reserves 2C Contingent resources (1) Reserves and resources as of 01.01.2015; in millions barrels of oil equivalent, as per LOTOS share 7
Sleipner estimated production (1) Sleipner fields currently in production Alfa Sentral future development 70% gas, 30% liquids (NGL, condensate) 45% gas, 55% liquids (NGL, condensate) Average 2015 Average 2016-2018 16 kboe/d 9.5 kboe/d First Oil 2020 Production after launch 4 kboe/d Continuation until 2022 Continuation until 2032 (1) As per LOTOS share 8
Alfa Sentral development project 10.3 m boe resources 2C (as per LOTOS share) Planned development as a tie-back to existing Sleipner infrastructure Concept select stage (DG2) passed in Sep 2015 Plan for Development and Operation (PDO) planned to be approved in 2017 Estimated production kick off in 2020 UK NCS 9
Sleipner transaction key parameters USD 160 m base purchase price 7.7 USD/boe base price per 2P reserves USD 25m contingent payment for Alfa Sentral, payable when PDO approved (2017) Value adjustment mechanism related to petroleum price levels in 2016-2020 Conditions precedent: customary Norwegian administrative decisions 01.01.2015 effective date Settlement in December 2015 No new loans needed to fund the acquisition Full recovery of tax asset (c. 320 m USD as of Sep. 2015) 10
LOTOS E&P portfolio post transaction 2P Reserves (1) +40% 73.3 m boe 52.5 4.9 25.7 40.0 40.0 7.6 7.6 Norway Poland Lithuania Before transaction Post transaction (1) 2P - Proved and probable; as of 01.01.2015 11
LOTOS E&P portfolio post transaction Production level doubled Exceeding production potential strategic target 32 Post transaction 28 24 Strategic production target 24 kboe/d as of 31.12.2015 20 16 12 Before transaction +100% 8 4 0 B3 B8 test production Lithuania Heimdal Sleipner Total 12
summary High quality of assets Experienced operator Statoil, Top class partners - Exxon, Total Doubling LOTOS hydrocarbon production, 2015 strategic target of 24 kboe/d achieved Full recovery of capital frozen in the tax asset till mid 2018 Access to stable cash flows in the coming years Ability to fund the transaction without taking new loans 13
Investor Relations tel. +48 58 308 73 93 fax +48 58 346 22 35 e-mail ir@grupalotos.pl