Exploration and production (upstream business)

Achievements

As at the end of 2010, LOTOS Petrobaltic delivered positive financial results, which turned out better than planned. Equally important was the maintenance of production volumes on a par with, or even slightly above, the previous year’s level.

LOTOS Petrobaltic’s oil and gas production
  2006 2007 2008 2009 2010
Oil [thousand tonnes] 265.5 190.6 257.8 175.4 186.5
Gas [million Nm3]   29.9    21.0   29.3   19.5 20.7

  

Management area of LOTOS Petrobaltic

Key achievements in 2010 included:

  • continued efforts to achieve efficiency gains and streamline business processes, aligning them with the best industry practices,
  • completion of negotiations and execution of an agreement for acquisition of full operating control over Lithuania’s AB Geonafta, execution of an agreement with Nordea Bank to extend financing for the transaction,
  • continued involvement in financing exploration and production projects on the Norwegian Continental Shelf,
  • start of efforts aimed to develop the capability for shale gas exploration in Poland and establish contacts with international operators active in that field,
  • start of efforts aimed to secure partners for ventures involving exploration for and development of structures and deposits located within LOTOS Petrobaltic’s licences on the Baltic Sea, especially gas structures and deposits, 
  • execution of an agreement with Bank Pekao S.A. for a credit facility of up to PLN 200 m.

Structure of the Petrobaltic Group
December 31st 2010

Structure of the Petrobaltic Group December 31st 2010

Exploration and production area of LOTOS Petrobaltic

Key achievements in 2010 included:

  • maintenance of oil production at the highest possible level – continued work on the B3 field, workover of production wells to sustain planned production rates,
  • production and appraisal work carried out as part of the B8 field development,
  • further geophysical and re-interpretation work aimed to evaluate the hydrocarbon potential within the acreage covered by licences included in the company’s portfolio,
  • extension of six licences for exploration and appraisal of oil and gas deposits: Gaz Północ, Łeba, Sambia Wschód, Sambia Zachód, Rozewie and Gotlandia. The scope of geological surveys was revised and six annexes were signed to mining usufruct agreements for the Gaz Południe, Gaz Północ, Łeba, Sambia Wschód, Rozewie and Gotlandia licences, expanding the scope of exploration to cover the Ordovician and Silurian formations, which will allow the company to simultaneously explore for unconventional hydrocarbons.

Exploration and production area of LOTOS E&P Norge

Key achievements in 2010 included:

  • continued work on the Yme project – drilling work and installation of submarine equipment was completed, construction of a production platform was continued. In September 2010, the MOPU production platform was hauled from the Abu Dhabi shipyard to the Norwegian Rosenberg shipyard in Stavanger, where another stage of work and preparation to site the platform on the field is being executed. As soon as the shipyard work is over, the platform will be hauled to the Yme field and connected to the production facilities. The timing of the production launch will depend on the weather, as specific sea conditions are required for transporting the platform and connecting it to the field. It is provisionally scheduled that the Yme field will be brought on stream in the third quarter of 2011,
  • acquisition of new licences as a result of execution of agreements as part of the APA 2009 Licensing Round:
    • 50% working interest and operatorship of the PL 556 licence,
    • 10% working interest in the PLN 497B licence, created by expanding the scope of existing PL 497 licence,
  • submission of an application as part of the APA 2010 Licensing Round and award in January 2011 of a 25% working interest in the PL 503B licence, created by expanding the scope of existing PL 503 licence,
  • drilling, analytical and re-interpretation work, as well as in-depth economic analyses, which found the hydrocarbon potential and prospectivity of the exploration licences PL 316CS (20% working interest) and PL 316DS (20% working interest) to be low. As a result, work on the licences was stopped and they were relinquished to the Norwegian government,
  • preparation and submission of an application as part of the 21st Licensing Round – its outcome will be announced in the second quarter of 2011,
  • execution of a loan agreement with PKO BP S.A. for the amount of USD 65 m.
  •  

Consolidated financial statements

In Grupa LOTOS, financial statements are verified by an independent auditor.

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