PKN Orlen – updating strategy

PKN Orlen will reveal more details on its plans to accelerate investment spending today. Earlier, PKN Orlen CEO Mr. Chalupec said in an interview, published in the company’s internal newsletter, that PKN Orlen capital expenditure on refining, retail, logistics, finding upstream resources, and foreign acquisitions would be increased substantially in the years 2006 – 2009. While old plans, tailored for PKN Orlen, only called for spending PLN 8.5bn, the new plan, prepared after the Unipetrol acquisition, raises that figure to PLN 14bn. It represents an increase to company’s capex plans, even disregarding Unipetrol, since PKN Orlen now plans to spend PLN3.4bn per annum on average, while we were looking for something between PLN 2.5-3.0bn in our financial model, based on earlier guidance. In general, we view the shift in PKN Orlen strategy towards accelerated investment spending positively, taking into account the robust business environment in the downstream oil business currently and the company’s healthy balance sheet. We reiterate our Buy rating for PKN Orlen, with a fair value estimate of PLN 69 per share.

The new strategy will be posted at www.orlen.pl at 11:00 CET, followed by a press conference in Warsaw with an on-line web-cast and analyst conference at 16.30 CET (Dial in number: +44 (0) 20 7162 0025).