PGNiG : Current Report No. 67/2016

2016.07.08 Current Report No. 67/2016

The Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA ('PGNiG') announces that tests for impairment of PGNiG SA property, plant and equipment have been performed, showing that impairment losses on the assets will reduce PGNiG SA's Q2 2016 operating profit by approximately PLN 624m.

The amount comprises impairment losses on:

1. hydrocarbon production assets at PGNiG SA: PLN 610m (Exploration and Production segment),
2. other property, plant and equipment of PGNiG SA (mainly CNG stations): PLN 14m.

Impairment losses are recognised after a periodic assessment of the recoverable amounts of assets. The impairment losses on hydrocarbon production assets are based on a future cash flow analysis, which took account of current trends in product prices and updated, long-term production forecasts. The main factor behind the impairment losses were long-term macroeconomic assumptions, particularly forecast prices of oil and gas, to which more than 50% of the impairment loss amount in the Exploration and Production segment is attributable.

Analysis of PGNIG SA tangible assets under construction (including exploration and evaluation assets) and assets of subsidiaries is still ongoing, which means that the impairment loss amount is still subject to change.

The data presented in this report may differ from actual figures, which will be released on August 12th 2016 in an interim report.