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UPDATE 1-Poland's Lotos posts smaller Q1 loss thanks to upstream assets
April 29, 2014 / 6:30 AM / 4 years ago

UPDATE 1-Poland's Lotos posts smaller Q1 loss thanks to upstream assets

* Reports better than expected Q1 net loss of PLN 32.4 mln

* Norwegian upstream assets help cushion dip in refining margins

* Says adjusted operating result down by 43 pct yoy (Adds detail)

WARSAW, April 29 (Reuters) - Poland’s No.2 oil refiner, Grupa Lotos, booked a smaller than expected first-quarter net loss as its upstream Norwegian assets helped mitigate the effect of low refining margins, it said on Tuesday.

The state-controlled group reported a net loss of 32.37 million zlotys ($11 million), compared with a 47 million loss seen by analysts and 147.35 million in the same period last year.

Last year, Lotos agreed to buy shares in 14 oil and gas licences off the coast of Norway - the so-called Heimdal assets - for $176 million to boost production and diversify its upstream operations.

Its first quarter of production from Heimdal helped it raise overall oil and gas output by 160 percent to 12.6 million barrels of oil equivalent (boe), with core profit (EBITDA) from upstream operations up by 53 percent to 157 million zlotys.

The Heimdal platform will now be closed for maintenance until May 22 to prolong its planned usability until 2034, Lotos said.

The refiner, like larger local rival PKN Orlen and peers around Europe, is struggling with falling refining margins. Lotos said its so-called model margin fell 31 percent to $5.05 per barrel.

The group’s adjusted operating result, the so-called EBIT LIFO, which removes the impact of crude oil price changes, fell by 43 percent to 73.3 million zlotys.

$1 = 3.0391 Polish Zlotys Reporting by Adrian Krajewski; Editing by Marcin Goclowski and Mark Potter

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