ANNUAL REPORT 2020 CONTENT 4 Opening Address to Shareholders 6 Company Profile 6 General Information 8 Organizational Structure NAFTA a.s. 9 NAFTA a. s. Board of Directors 9 NAFTA a. s. Supervisory Board 9 NAFTA a. s. Top Management 10 Shareholders Structure and their Shares in Registered Capital 12 Report on the Company’s Business Activities 13 Underground Gas Storage 16 Underground Gas Storage - Germany 19 Exploration and Production of Hydrocarbons 24 Employment, Education and Corporate Culture 26 Corporate Responsibility 28 Community Activities 30 Report on the Results of Business Activities 36 NAFTA´s Prospects 2020 located. Because their potential is becoming limited after long-term produc- tion, we also worked intensively during 2020 to explore further, either on OPENING ADDRESS our own or together with partners. Exploration in Slovakia is planned in areas around Trnava, Topoľčany, Pavlovce nad Uhom and in the Beša License. report Annual TO SHAREHOLDERS Moreover, NAFTA is effectively using its long-term experience in exploration and production area outside Slovakia, too. In Ukraine, we are continuing a.s. NAFTA to win new exploration licenses. As a shareholder in EP Ukraine, NAFTA was Dear Shareholders, able in 2020 to obtain two new licenses, Grunivska and Okhtyrska. We con- tinued in activities in previously won licences at Uzhhorod and Vatazhivska 2020 was a year full of changes. The COVID-19 pandemic was undoubt- in Ukraine and also participated in an exploration project in Croatia as well. edly the most significant factor affecting the entire global business sector, including energy. Yet in such an exceptional situation, the key role staff We see great potential for our core business activities in the future, follow- employed at strategic energy companies played became noticeable. ing up on our belief that natural gas will remain irreplaceable in today´s Their work is indispensable to everybody’s day-to-day living. Our facilities energy mix as well as in transition to a green economy. This stable energy were able to remain safe and stable last year thanks to rapid adoption source, extensively used in households as well as industry, provides space of measures and the huge effort of our employees. Intensive preparation for various synergies in the development of renewables, taking into consider- to cover various disease spread scenarios, strict internal guidelines to sup- ation technological, financial and ecological aspects. Therefore, our highly port generally applicable regulations and regular testing of our operation developed infrastructure and know-how, upgraded over years, enables us to employees were all carried out to protect the health of people at NAFTA think in the future about more than clean natural gas inside our facilities. During and also in order for energy to be smoothly brought from our storage facili- 2020, NAFTA underscored its intentions with the installation of solar panels ties and production wells to customers. We are immensely proud that at selected locations and through innovative energy storage projects. Notwith- none of our energy was wasted. Throughout the year, NAFTA managed standing, there is a large number of options available to us and we are trying to provide stable and reliable services even in these difficult circumstances. to explore them in detail within a number of projects in progress both at home and abroad. In natural gas storage, NAFTA provided in 2020 both its traditional seasonal products and a variety of flexible and innovative products. In the past year, In 2020, NAFTA also concentrated on environmental protection, preparing the number of our storage contracts reached three digits, a feat NAFTA man- for the closure of sites when work there will be completed and supporting aged because of the intensive work we had done on our portfolio by creating environmental protection. In addition to these projects, NAFTA continued its pro-client products for international settings. traditional contributions to community projects in locations where it operates. Our commitment to the environment remains strong and we continue to be Nonetheless, the foundation for any successful trading of our services dedicated to its protection and sustainable development. is a high-quality professional and technological background, which NAFTA clearly has due to its many years of experience. In 2020, we invested Expert skills and initiatives our employees are taking are helping us to use SHAREHOLDERS TO ADDRESS OPENING in a number of projects to further upgrade our storage technology, including our know-how effectively and to export it to foreign markets as well. Their wells, safety systems and pipeline connections. We devoted time and effort traditional jobs were impacted in 2020 both by the pandemic and measures to predictive diagnostics and limiting methane emissions, too. put in place to combat it. The responsible approach taken by our employees was thus one of the fundamental pillars of our success in the previous year. 2020 In the previous year, NAFTA expanded its gas storage business into Germany Close attention was paid to protecting their health in this challenging situation. and in 2020 continued reliably operating the Inzenham-West, Wolfersberg Simultaneously, NAFTA sought to promote their professional development and Breitbrunn/Eggstätt storage facilities. Despite constraints brought by the through training and conferences, especially online. A great deal of thanks in pandemic, we were able to work together intensively and professionally with 2020 goes to our staff and their professional approach in the operation colleagues at our Bavarian facilities even at a distance. We finished several of our strategic infrastructure. investments and introduced a maintenance and asset management system at our operations in Germany. International projects in underground gas storage, exploration and production all enabled NAFTA to transform from a local Slovakian company into a major Another success we at NAFTA are especially proud of is the expansion player in Europe’s energy market. This was confirmed in 2020 with further of activities into yet another country - the United Kingdom. In 2020, NAFTA significant expansion. We believe our expansion will continue in the future. started providing technical and advisory services at Humbly Grove, a storage facility located only 50 kilometers outside of London and a significant element NAFTA a.s. Annual report Annual a.s. NAFTA in the UK’s natural gas infrastructure. Providing professional services in both Germany and the UK confirms our high competence in natural gas storage. Oil and gas exploration in Slovakia is another relevant area in which we operate and have been gathering our experience for more than a century. Ing. Ján Špringl Ing. Robert Bundil Ing. Martin Bartošovič We have long been active mainly in the Vienna Basin and the Eastern Slovak Lowland, where the country’s most important regional hydrocarbon fields are Chairman of NAFTA a.s. Member of NAFTA a.s. General Director of NAFTA a.s. Board of Directors Board of Directors 4 – 5 2020 COMPANY report Annual PROFILE a.s. NAFTA NAFTA is an international company with extensive experience in natural gas storage and underground facility development in Slovakia. It is also Slovakia’s leader in exploration and production of hydrocarbons. In Europe, the company actively operates gas storage facilities, explores and produces hydrocarbons and participates in renewable energy storage projects. NAFTA provides development, engineering and consultation services for facilities with overall storage capacity of approximately 64 TWh. In addition to Slovakia, the company is present in the Czech Republic, Germany, Great Britain, Austria, and Ukraine. COMPANY PROFILE COMPANY 2020 BUSINESS NAME NAFTA a.s. REGISTERED OFFICE Votrubova 1 821 09 Bratislava Slovak Republic COMPANY REG. NO. 36 286 192 NAFTA a.s. Annual report Annual a.s. NAFTA CORPORATE FORM Joint stock company COMMERCIAL REGISTER Bratislava I District Court Business Register, Section: Sa, Insert No.: 4837/B 6 – 7 2020 NAFTA a.s. TOP MANAGEMENT NAFTA a.s. AS OF 31. DECEMBER 2020 Annual report Annual Ing. Martin Bartošovič ORGANIZATIONAL General Director NAFTA a.s. NAFTA STRUCTURE AS OF 31 DECEMBER 2020 Ing. Szilárd Kása Ing. Mgr. Ladislav Barkoci Ing. Ladislav Goryl Ing. Jozef Levoča, MBA GENERAL Director of Economic Section Director of Sales Director of Underground Director of Exploration MEETING OF and Marketing Section Gas Storage Division and Production Division SHAREHOLDERS BOARD SUPERVISORY OF DIRECTORS BOARD NAFTA a. s. BOARD OF DIRECTORS AS OF 31. DECEMBER 2020 INTERNAL AUDIT Ing. Jan Špringl STRUCTURE ORGANIZATION Chairman GENERAL DIRECTOR 2020 Ing. Jozef Pagáč Vice-Chairman GENEREAL SALES AND DIRECTOR MARKETING SECTION SECTION Annual report Annual EXPLORATION ECONOMIC AND PRODUCTION SECTION NAFTA a.s. NAFTA DIVISION Ing. Robert Bundil Ing. Bohumil Kratochvíl Ing. Dušan Halgaš Member Member Member UNDERGROUND GAS STORAGE NAFTA a.s. SUPERVISORY BOARD DIVISION AS OF 31. DECEMBER 2020 Ing. Lucia Ondrušová, PhD. doc. JUDr. Boris Balog, PhD. Bc. Jozef Tittel Chairman Member Member Gary Wheatley Mazzotti Ing. Daniel Kujan Ing. Peter Šefara Vice-Chairman Member Member 8 – 9 2020 1,49 % TREASURY SHARES 1 593 551 € 1,91 % OTHER SHAREHOLDERS 2 050 478 € Annual report Annual NAFTA a.s. NAFTA 40,45 % CZECH GAS HOLDING INVESTMENT B.V. 43 374 750 € SHAREHOLDERS STRUCTURE AND THEIR SHARES SHAREHOLDERS STRUCTURE IN REGISTERED 2020 CAPITAL Annual report Annual 100 % TOTAL NAFTA a.s. NAFTA 107 235 562 € 56,15 % SPP INFRASTRUCTURE, A. S. 60,216,783 € as of 31. december 2020 10 – 11 10 2020 UNDERGROUND GAS STORAGE report Annual In 2020, NAFTA’s underground gas a.s. NAFTA storage continued operating safely and reliably. Last year, we provided traditional seasonal products and flexible storage services as part of our portfolio. More than 130 storage contracts were signed in 2020 as our portfolio grew. REPORT ON THE COMPANY‘S BUSINESS ACTIVITIES REPORT ON THE COMPANY‘S BUSINESS ACTIVITIES MORE THAN 130 STORAGE CONTRACTS WERE SIGNED 130IN 2020 The typology of storage contracts has been changing for some time and short- term ones are now prevalent.