* Q1 net profit beat expectations with 10-pct rise
* Says looking for oil and gas deposit takeover targets
(Adds company comments, details)
By Adrian Krajewski
WARSAW, May 9 Poland's dominant gas firm PGNiG
signalled a possible upgrade to its full-year earnings
targets after record oil sales brought the state-controlled
company a larger than expected net profit gain in the first
The group sees revenue this year up a notch at 32.7 billion
zlotys ($11 billion) and core profit or EBITDA up 5 percent to
5.9 billion due to larger oil and gas production from deposits
in Poland and Norway.
"We announced a forecast, and since the first quarter is a
little better, one can expect that the whole year may be better
than we forecast," PGNiG Chief Financial Officer Jaroslaw Bauc
told a news conference.
"However, it needs to be remembered that the fundamental
reasons for the better first-quarter results are not going to be
reproduced in the following quarters."
PGNiG has little room to adjust gas prices in line with
demand as they are fixed by the country's industry regulator.
Three quarters of the gas it sells is imported from Russia under
long-term contracts with Gazprom.
A mild winter led to a 7-percent fall in the group's
first-quarter revenue to 9.5 billion zlotys. But lower costs and
a 40-percent jump in oil volumes boosted PGNiG's net profit by
10 percent to almost 1.2 billion zlotys.
Analysts had forecast 955 million, according to a Reuters
Saddled with investments in Polish shale gas exploration,
PGNiG is seeking to cut costs and wants to use a chance to
renegotiate gas prices with Gazprom in November. It also wants
changes to a deal to import Qatari liquefied natural gas (LNG).
The contract could mean Poland paying some of the highest
prices in the world for LNG as eastern Europe's biggest economy
seeks to wean itself off Russian supplies and kick-start growth.
PGNiG is under pressure to help reduce Poland's energy
reliance on its former Soviet master by seeking alternative oil
and gas deposits abroad. Norway is the company's top choice.
"With our net debt to EBITDA ratio falling to 0.46 in the
first quarter (from 1.01 a year earlier), we are comfortable
about financing any such possible deal," CFO Bauc said.
"I think the net debt ratio level of 2 times EBITDA is safe,
so the cushion is pretty wide."
($1 = 3.0184 Polish Zlotys)
(Additional reporting by Marcin Goclowski; editing by Tom