UPDATE 2-Lotos shifts more upstream with MidAmerican Energy deal

Tue Oct 30, 2012 10:06am EDT

* Signs gas co-operation deal with CalEnergy

* Buys 50 pct in Lithuanian upstream firm

* Seeking projects in Norway

* Q3 net at $195 mln vs $163 mln seen in poll

* Shares up 4.9 percent

By Pawel Bernat and Maciej Onoszko

WARSAW, Oct 30 (Reuters) - Lotos shifted further into upstream business on Tuesday by agreeing to develop Baltic Sea gas deposits with a unit of Berkshire Hathaway's U.S. power MidAmerican Energy Holdings.

The deal with MidAmerican's CalEnergy Resources Poland will help the Polish refiner tap reserves estimated at up to 4 billion cubic metres, or less than a third of Poland's total annual consumption, Lotos said.

The Polish group will hold 51 percent and CalEnergy 49 percent in a company that will run seismic tests and select an exploration concept for Lotos's gas deposits B4 and B6. The co-operation could expand to other fields later, Lotos said.

"The competences and potential standing behind CalEnergy allow us to look with optimism into chances for developing our gas deposits," Lotos Chief Executive Pawel Olechnowicz was quoted as saying in a press statement.

State-controlled Lotos has long been seeking to reduce its dependence on Russian oil and refining. It already holds stakes in fields offshore Poland, Lithuania and Norway, including a 20 percent stake in an ill-fated North Sea oil platform Yme.

No financial details of the deal were revealed. The agreement, however, hinges on an assurance that Poland's recently unveiled draft hydrocarbon law will not undermine the project's profitability.

WARNING

In a separate statement, Lotos also said its unit Geonafta bought a remaining 50 percent stake in a Lithuanian company UAB Manifoldas for an undisclosed price.

It expects to close the deal by the end of 2012 after approval from Lithuania's anti-monopoly office.

Lotos also warned on Tuesday it may delay its planned purchase of a Norwegian oil field until 2013, part of a plan to make use of a 1.05 billion zloty ($326.77 million) deferred tax asset from earlier this year.

"We are actively seeking a deposit in Norway. I can't promise we will conduct this transaction this year. It might happen at the beginning of next year," Chief Financial Officer Mariusz Machajewski told an analyst conference.

At 1319 GMT, Lotos shares outperformed the market with a 4.9 percent rise after reporting a better-than-expected third-quarter profit, adding to a 36 percent rise year-to-date.

The net figure came in at 626 million zlotys ($195 million), helped by higher refining margins and a stronger zloty, which reduced its foreign-denominated debt. Analysts had expected the refiner to post a profit of 524 million zlotys.

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