LOTOS Petrobaltic S.A. and CalEnergy Resources Poland Sp. z o.o. will cooperate in the development of B4 and B6 gas fields on the Baltic Sea. The total quantities of natural gas reserves amount to as much as 4 billion cubic metres. The two companies executed a cooperation agreement in Gdańsk on October 30th 2012.

The project provides for joint operations of LOTOS Petrobaltic S.A. and CalEnergy Resources Poland Sp. z o.o. to be carried out through a special purpose vehicle (SPV), whose costs and profits will be shared between its owners in the following proportion: LOTOS Petrobaltic - 51%, CalEnergy Resources - 49%.

– We are satisfied that CalEnergy Resources Poland Sp. z o.o. will be our partner at B4 and B6 fields – said Paweł Olechnowicz, CEO of Grupa LOTOS S.A. – Its qualifications and potential allow us to be optimistic about the success of development of our gas fields.

– This is a project that has interested CalEnergy for some considerable time and we are very pleased to now have the potential opportunity to work with LOTOS Petrobaltic on developing these fields – said Peter Youngs, Managing Director of the CalEnergy Resources group of companies – We very much hope that the new hydrocarbon tax legislation, to be published in November, will not jeopardize the project economics for offshore fields.

Under the pre-construction work programme, seismic acquisition and selection of a preliminary field development concept are scheduled for 2013-2014. After those both parties will be capable to make the final investment decision (FID) regarding gas fields development. Moreover the project enables LOTOS Petrobaltic to pursue other gas field exploration and development as a potential tie-in to B4 and B6.

CalEnergy Resources Poland Sp. z o.o. is a member of MidAmerican Energy Holdings Company, a consolidated subsidiary of Berkshire Hathaway Inc.

Under the terms of the agreement CalEnergy Resources Poland Sp. z o.o. will fund both CalEnergy Resources Poland Sp. z o.o.’s and LOTOS Petrobaltic’s share of the seismic survey acquisition and the preliminary field development concept expenditures. Completion of the agreement is subject to a number of conditions precedent, which include determination that the new hydrocarbon tax legislation does not harm the project’s economic viability.  

Agreement conclusion launches mutual cooperation including the process of setting up an SPV and license transfer.

Being part of the LOTOS Group, LOTOS Petrobaltic S.A. is responsible for implementing its strategic objectives related to exploration for and production of crude oil and natural gas. The company operates in the Polish offshore area covering approximately 29 thousand km2.  LOTOS Petrobaltic holds licences for exploration and appraisal of hydrocarbon reserves, which cover seven areas totalling over 7,100 km2, situated in the eastern part of the Polish offshore area. The company has also been awarded production licences relating to the B3, B4, B6 and B8 fields. The B3 field is currently in production, while the B8 field is being prepared to come on stream. LOTOS Petrobaltic has established its own group of companies, which comprises more than a dozen of subsidiaries. LOTOS Exploration & Production Norge AS is to ensure access to crude oil under the Norwegian Continental Shelf in the North and Norwegian Seas. AB LOTOS Geonafta operates in the Lithuanian oil sector. Energobaltic Sp. z o.o. is responsible for managing tail gas generated in the process of oil production from fields located in the Baltic Sea. The other group companies provide sea transport services.

Information Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. (+48) 58 308 87 31, (+48) 58 308 83 88, e-mail: media@grupalotos.pl

CalEnergy Resources Poland Sp. z o.o., Al. Wilanowska 206 app.19, Warsaw 02-765, Poland, tel. (+48) 22 853 0176