Financial analysis

Operating profit of the Exploration and Production segment was PLN 1,095m, down PLN 911m (45%) year on year. At PLN 2,426m, EBITDA was lower than the year before – by PLN 717m (23%).

The segment’s revenue decreased by PLN 1,216m (20%) year on year, to PLN 4,855m, despite a 19% increase in the volume of crude oil sales (mainly from deposits in Norway, where sales grew by approximately 59%). The revenue decline reflected the fall in crude oil prices (in Polish złoty terms, the average price of Brent in 2015 was approximately 36% lower than in 2014). The decrease in crude oil prices, adversely affecting the profitability of exploration projects, also depressed demand for exploration services provided by the Exploration and Production segment. In 2015, revenue from geophysical and exploration services fell by PLN 416m year on year. The segment’s operating expenses were down PLN 305m (8%) on the back of lower impairment losses on the segment’s assets, which in 2015 lowered the segment’s profit by PLN 846m (PLN 1,037m in 2014). In addition, reversal of provisions for well decommissioning costs added PLN 128m to the segment’s operating profit, compared with a negative effect of PLN -38m in the same period of the previous year. The reversal was a result of the lower average decommissioning cost per well and the higher discount rate.