Polish Oil and Gas Company Company Overview December 2016 Agenda 1. PGNiG Group & Polish Gas Market 2. PGNiG Segments Exploration and Production Trade and Storage Distribution Generation 3. Strategy, CAPEX, Debt 4. Appendix - Financial Results of Q3 and FY 2015 2 Agenda PGNiG Group and Polish Gas Market 3 Poland’s no.1 integrated group in the oil and gas sector Natural gas (direct sales) Conventional and unconventional deposits in Poland, Norway and Crude oil Pakistan Geological, geophysical and drilling services EXPLORATION AND PRODUCTION ) Natural gas (wholesale) gas production Natural Natural ( Natural gas (retail) DISTRIBUTION Natural gas (imports) Electricity TRADE AND STORAGE Electricity gas Natural Natural Coal Heat distribution Biomass Heat HEAT AND ELECTRICITY GENERATION AND DISTRIBUTION 4 Fifth largest Polish company on the Warsaw Stock Exchange** Stock performance since January 1st, 2016 Listed on WSE since PLN September 2005 5,8 Market cap. of PLN 28bn 5,6 (EUR 6.3bn, USD 6.7bn)* 5,4 5,2 Significant share 5 in WIG 20 index: 5.2% 4,8 4,6 4,4 4,2 01'16 02'16 03'16 04'16 05'16 06'16 07'16 08'16 09'16 10'16 11'16 PGNiG WIG20 Shareholders (as on September 30, 2016) Treasury Shares Stock performance since January 1st, 2012 1.6% PLN 7 Free float 28.6% PGNiG WIG20 Average daily 6,5 turnover in 2015: PLN 28m 6 (~EUR 6.3m / 5,5 USD 6.7m) State Treasury 70.4% 5 4,5 4 3,5 3 2012-01-02 2013-01-04 2014-01-10 2015-01-13 2016-01-12 * PGNiG = 4.75 PLN and EUR/PLN = 4.42; USD/PLN = 4.17 (as on November 29th 2016) / ** In terms of market cap. 5 Gas market in Poland: Low consumption with growth potential Natural gas consumption by country in 2015 Natural gas sales by sector in UE in 2014 bcm 80 74,6 Others 3% 70 Power Plants 23% Residential 60 and Commercial 43% 50 40 27,6 30 20 15,1 16,3 Industry 10,3 31% 10 7,2 Residential and Commercial Industry Power Plants Others 0 Czech Republic Romania Poland Belgium Spain Germany Natural gas sales by sector by PGNiG in 2015 and 2014 Primary energy consumption by fuel in 2015 2015 2% 8% 100% 5% 2% 12% Nuclear energy 8% 16% 2014 80% 13% 41% 45% Renewables 50% 22% 26% 60% Natural gas 40% 45% 37% Oil 53% Residential and Commercial Industry Power Plants Others 20% 16% Coal 0% EU Poland Source: BP Statistical Review 2015 , BP Energy Outlook 2016 and EuroGas Statistical Report 2015/ Gas consumption comprises sales, as well as in-house consumption and change of inventories 6 Gas market worldwide Primary energy consumption by fuel Natural gas demand m t oil eq. 40% 5000 Oil 4 428 4 136 3 874 Asia Pacific 4000 3 521 30% Oil 30% Coal 3 066 3 160 Africa Gas 26% 2 880 Coal 25% 3000 2 505 Gas Middle East 20% 2 182 1 925 2000 1 768 Europe & Eurasia S & C America 10% Renewables 8% 1000 Hydro Hydro 7% Nuclear Nuclear 5% North America Renewables 0% 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 1990 1995 2000 2005 2010 2014 2015 2020 2025 2030 2035 Annual LNG supply by region Annual LNG demand by region m t m t 500 400 345 413 334 392 318 400 361 North America 296 MENA* 340 300 265 311 246 Australia 240 Latin America 279 284 300 Other 200 Asia (without JKT) 200 MENA* North America South Asia 100 100 Europe Africa Japan/Korea/Taiw 0 0 an 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 * Middle East-North Africa / Source: IHS, BP Energy Outlook 2016 7 Exploration & Production Agenda Operating segments Trade & Storage of PGNiG Group Distribution Generation 8 PGNiG Group’s financials 2010-2015 PGNiG Group’s EBITDA** Fifth biggest company in Central PLNbn and Eastern Europe* 7 6,4 5,6 6,1 Third biggest oil company in the 6 4,6 region* 5 4,4 3,1 2,4 Stable EBITDA level due 4 3,5 3,4 1,2 2,0 0,6 to diversified inflows sources 3 1,0 0,8 1,9 0,5 0,2 2 2,3 2,0 2,3 1,7 1,6 1 1,6 0,5 0,7 0 -0,1 0,5 0,5 2010 2011 2012 2013 2014 2015 -1 Expoloration and Production Trade and Storage Distribution Heat and Power Generation EBITDA breakdown 2015 Expoloration and PGNiG Group’s revenue and net profit Distribution 2014 Production 39% 40% 31% PLNbn 40 50% 34,30 Revenue 36,46 35 32,12 7% 28,73 12% 30 23,00 25 21,28 Heat and Trade and Power Storage 20 Generation 11% 10% 15 10 2,82 5 2,46 1,63 2,23 1,92 Net profit 2,14 0 2010 2011 2012 2013 2014 2015 * Source: Rzeczpospolita: Europa 500 / ** EBITDA before intra-group eliminations and excluding „Other segments” 9 Exploration & Production summary Production volumes* PGNiG SA is a leader in production of gas and crude mm boe 50 oil in Poland 40,3 40,1 37,6 37,9 38,6 38,7 40 Average daily production – over 2,1 4,9 4,0 4,2 4,2 30,9 31,3 31,4 3,1 100,000 boe 6,0 5,8 5,6 5,6 5,5 6,2 30 3,7 3,4 3,6 2,4 3,1 4,0 3,9 4,5 5,2 20 PGNiG’s resource base 27,9 27,8 in Poland: 27,2 27,2 26,0 25,8 25,1 24,5 24,5 10 proved gas reserves 504 mm boe (78.1 bcm)** 0 proved oil reserves 131 mm boe 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F (17.9 m tonnes) Natural gas Poland Natural gas Abroad Crude oil and condensate Poland Crude oil and condensate Abroad Oil & Gas concessions in Poland: Reserves of natural gas and crude oil 61 exploration/appraisal mm boe Crude oil/NGL/Condensate Gas 227 production 1000 854 860 847 805 796 768 800 Exploration & Production activities: 600 680 685 675 57 production facilities in Poland 643 622 589 400 over 2 thousand producing wells 200 174 175 172 162 174 179 0 2010 2011 2012 2013 2014 2015 * Natural gas sold at cost within the Group / ** High-methane gas equivalent 10 Exploration & Production financial results Exploration and Production’s EBITDA Low oil price affects E&P’s PLNbn results 4,0 Revenue from sales of oil and condensate in 2015 down by PLN 0.7bn 3,0 Net impairment losses, dry wells and seismics written off at: PLN -846m in 2015 2,0 PLN -1.037bn in 2014 3,4 3,1 2,4 Segment’s results for FY 2015 1,0 1,9 2,0 -20% -8% -23% -45% 1,2 PLNm 6 6 071 0,0 4 855 2010 2011 2012 2013 2014 2015 4 4 065 3 760 3 3 143 2 426 2 2 006 1 095 Operating Revenue EBITDA EBIT expenses Average prices of crude oil Segment’s results for Q1-3 2016 USD/bbl -17% 20% -57% -86% 120 5 6 PLNm 3 3 712 110 9 30 3 09 3 2 91 2 2 2 440 100 1 1 272 90 990 179 80 Operating Revenue EBITDA EBIT 70 expenses 60 50 40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 2013 2014 2015 11 International E&P activities – Norway Licenses 18 USD 360m (Skarv) Licence cost NOK 1.95bn (Morvin, Vale, Vilje, Gina Krog) Skarv CAPEX (PGNiG’s part) approx. USD 800m 59 mmboe (Skarv) Reserves of the licence (2P) for PGNiG 29 mmboe (Morvin, Vale, Vilje, Gina Krog) Skarv Morvin Production in Norway mm boe 9 8,6 Crude oil Natural gas 8 7,2 7,4 7,5 Vale 7 5,8 Vilje 6 4,9 Gina 4,2 4,2 5 4,3 4,0 Krog 4 3,1 3 2,1 2 3,7 2,7 3,2 3,2 3,2 1 2,2 0 2013 2014 2015 2016F 2017F 2018F 12 International E&P activities – Africa and Asia African assets: Lybia Asian assets: Pakistan Ghadames/Murzuq concession Kirthar concession agreement February 25th 2008 agreement May 18th 2005 shares PGNiG - 100% shares PGNiG 70%, Pakistan Petroleum 30% area 5,494 sq km area 956 sq km Awbari province, location Sindh province, folded belt Kirthar location Murzuq basin 3,000 km 2D; obligations 2 wells, 100 km 2D (fulfilled) 1,500 sq km 3D, obligations 11.5 bcm of natural gas 8 wells estimated reserves 146 bcm of natural gas, 4.5 bcm of natural gas (Pab formation) estimated reserves 15m tonnes of condensate The Rizq-1 well proved the existence of a second deposit within the Kirthar Q4 2013: asset write-off at PLN 420m and a provision for PLN 137m for future licence area. license obligations. Surface installation (cost: USD 13m) allow to increase extraction to 800 cm/min Force majeure clause activated. 13 Gas supply & sales Trade and Storage segment comprises: Sources of gas supply of PGNiG SA in Poland sales of natural gas both imported and domestic to retail and wholesale bcm markets, sales and trading of electricity 18 15,2 15,3 15,0 14,3 storage of gas.