* Strategy pegs total investments in 2013-17 at PLN 22.5 bln
* Plans dividend yield of up to 5 pct
* Pegs avg annual adjusted EBITDA at PLN 6.3 bln
* General Electric to build PLN 1.1 bln power block
By Pawel Bernat and Adrian Krajewski
WARSAW, Nov 30 Poland's top refiner PKN Orlen
said on Friday it would invest more than the company is
worth in energy production and shale gas exploration over the
next five years, sending its shares down sharply.
The state-controlled company, which is worth 20 billion
zlotys (6.4 billion euros), said it planned to spend 22.5
billion zlotys between 2013 and 2017, with a focus on shale gas
exploration and energy production.
PKN shares fell more than 2 percent, the biggest decline on
Friday of any of the blue-chip stocks on the Warsaw bourse. The
company announced it would resume paying dividends, but that was
not enough to ease market concerns.
"Part of the market was may be scared by the planned
investment scale," Ipopema Securities analyst Konrad
PKN, together with Poland's gas monopoly PGNiG, is
at the forefront of the country's drive to tap its shale gas
resources. PKN expects its annual gas production to rise from
zero to 161 million cubic metres by 2017.
Shale gas is a strategic priority for the Polish state,
which is anxious to reduce its dependence on energy imports from
Russia. But some people in the sector say that, from a
commercial point of view, shale gas carries big risks.
"In the coming years we expect our operating cash flows to
be high and we believe that we'll be able to combine dividends
with investments," PKN's deputy head Slawomir Jedrzejczyk said.
The refiner has not paid dividends since 2008. It now sees
its dividend yield at up to 5 percent, with the joint dividend
payout in the five years to come at no higher than 5 billion
Jedrzejczyk told a call with analysts that the market should
expect the dividend from its 2012 profit in the range of 0-2
zlotys per share, which pegs the payout at up to 855 million
PKN wants to close this year with investments of around 2
billion zlotys, rising to 3.6 billion in 2013 - the first year
of the group's new strategy.
The refiner added it reached an agreement with General
Electric to build its new gas-fired power block in
Wloclawek for 1.1 billion zlotys. It plans for the plant to be
finished in three years.
PKN also forecasts this year's EBITDA core profit -
employing the LIFO (last-in, first-out) inventory accounting
method which strips out the effect of oil reserves revaluation
-at around 5.1 billion zlotys.
In the five years to come, the group expects average EBITDA
LIFO of 6.3 billion zlotys, 58 percent more than in the years