Good day, and welcome to the Grupa LOTOS S.A. consolidated financial results for Q1 2022 conference call. Today's conference is being recorded, and at this time, I'd like to turn the conference over to Katarzyna. Please go ahead. Hello, everybody. Good morning. This is Katarzyna Kifner, IR Department. We will deliver the presentation first to give you some colors on the financial results, consolidated results for the first quarter of 2020. Let me introduce the speakers. The speakers will be Mr. Łukasz Minuth, Chief Financial Officer of Grupa LOTOS. Good morning. Przemysław Krysicki, Investor Relations Head. Hello, good morning. Okay. Once we deliver the presentation, we will be ready to take your questions. Let me now hand over to Mr. Łukasz Minuth. Good morning. First of all, we are very happy to have you all on the call. Let me just go through the first part of the presentation. In a few bullet points, let's overview the, like, key performance indicators and the fact that we observed during Q1 2022. As you obviously know, we can divide this period into two parts. The first part, as we observe the macroeconomic environment was a quite fast recovery from the COVID-19 outbreak. We noticed significant increase in crack spreads and stable situation on gas prices. They were pretty high but still stable. The same goes to the crude oil prices. The second part of the quarter was the outbreak of war in Ukraine and the whole environment disrupted again. I think that those are the main factors that are connected to the external environment and the influence on operational performance of LOTOS Capital Group. In this environment, we delivered PLN 1.3 billion in clean EBITDA LIFO, and we can divide this amount into almost PLN 540 million in our exploration and production segment, and PLN 775 million in our refining and marketing segment. Later on, we will give you much more details about the main drivers that were resulting in those figures. Let's move to next bullet points. This PLN 1.3 billion EBITDA LIFO was not converted into operating cash flow. We realized PLN 400 million in loss on operating cash flow, and obviously the turnaround maintenance was the main reason. This is always a challenging period, not only for the operating team in Grupa LOTOS, but also the financial departments are very much involved in the turnaround maintenance. From that perspective, we had a very stable financial situation. We ended the quarter with net debt to LIFO EBITDA at the level of 0.3, and we had those numbers way below our strategic targets. From other operational factors, of course, we are still focusing on the limitation of natural gas. Later on, we will go through the quotations and this disruption that we observe in second part of the quarter. That was just a higher impact from the first part where the natural gas quotations were still pretty high. Of course, we focus on the diversification of crude oil supplies. This is due to the current situation in Ukraine. From other factors at the second part of turnaround maintenance and the trade conditions on our Polish markets were unharmed. We still delivered our products, and we didn't notice any problems from that. Last but not least, we are getting prepared the whole organization to the takeover by PKN Orlen, and that's I think the main fact that connected the Q1 results. From that perspective, I would like to hand now the voice to Przemysław Krysicki, who will give you a few informations about the main results from Q1. Thank you. Hello again. We're starting with traditionally with four indicators. Financial and business indicators, to sum up the general performance of Grupa LOTOS in the first quarter 2022. What you can see, LIFO EBITDA amounted to PLN 1.3 billion in the first quarter 2022. Over 115% bigger than in corresponding first quarter previous year. Of course, it's thanks to the stable situation that we faced already in 2021, and it's still the same at the beginning of the first quarter. Unfortunately, the situation is changing after the start of the aggression of Russia in Ukraine. You can see also the strong upstream contribution amounted to over PLN 500 million even with lower production that was planned. I will elaborate in the next part of the presentation of that. When we're looking at the crude oil throughput in Gdańsk, 1,900 tons comparing to the first quarter 2021, it's almost the same. Less than in last quarter 2021, but it's also due to the turnaround that was conducted from March til' mid April. When we're looking at the net debt to LIFO EBITDA indicator, again you can see the very stable and solid number, 0.3. It's generally the impact of lease liabilities, but of course, we do have other liabilities as well, like bank loans and still more. Exploration and production daily hydrocarbons production is less than 9% comparing to corresponding quarter in 2021. It was mainly due to some production limitation that we faced in the first quarter, and I will have the chance to tell you more about it in the section exploration and production. Now, I will hand over to Łukasz again. Thank you very much, Przemysław. Let's move to the external environment. First of all, as we did it during the previous presentations, let's focus on the natural gas prices. As Przemysław said, the main operational event in refinery was the turnaround maintenance. To be honest, from the operational perspective and from the financial perspective, still the biggest challenge is how to optimize the gas consumption because this has a major impact on our financial results. From that perspective, what you can see on this slide is the situation, and we could focus on the Q1 numbers. Even though the first part of Q1 looks like a quite low natural gas prices, it was still at the level of about $150-$170 per barrel. After the war outbreak, the prices jumped to level exceeding $350 per barrel of oil equivalent. When we talk about the war outbreak, I would say that right now, for the last two months, we are preparing the new fundamentals for the oil and gas and the refinery segment. Having in mind the current situation and possible perspectives for the future, we can go to the next slide and look what happened on the main quotations compared to our strategic assumptions. Of course, when we prepared the strategy, nobody thought that in 2022 we will face such a situation and as we have right now, but let's compare the main numbers. When we look on the upper left part of this graph, we can see the Brent prices. After the war outbreak, the prices went up to $100-$120 per barrel. Currently, this is an average for Q1. Currently, to be honest, the prices look somehow for a balancing point around $100 per barrel. When we look on the natural gas prices, we see that an average for Q1 goes up to $ 170. As the previous slide showed, we saw that the maximal prices were closer to $350, so double to the average that we saw during Q1 2022. This shows how turbulent the current macroeconomic environment for the oil and gas segment is. But as I think all of you know, we observe much lower gas prices currently. There were periods when they went below $100 for barrel of equivalent. On the right-hand side, the main refinery crack spreads. When we look at gasoline crack spread, 10% below our strategic assumptions, Q1 2022, with an average of $168. Very solid crack spread for Grupa LOTOS, something that we haven't seen for a very, very long time. Diesel crack spreads, as we informed you previously, this is the main product for our refinery. Diesel prices jumped to the average level of over $170 per ton. We have to keep in mind that this is an average for the Q1. We observed a quite solid and stable $90 crack spread for diesel during January and February. March is an average of over $140, almost $150. Currently, we see that we have even higher crack spreads on diesel. When we look on the heavy fuel oil, quite in line with our strategic assumptions, -$236 per ton. This is a quite stable situation for the current environment. Moving forward to the external environment, keeping in mind what happened during February and March. We see that the exchange rates are quite stable. Polish złoty is weakening a little bit, and this is a positive factor for LOTOS Capital Group results. When we analyze all three remaining charts together, still, we can see very solid and high GDP growth in Poland, and this drives growth on the diesel and gasoline consumption in Poland. From the trade conditions and the consumption in Poland, we have a very positive environment for our refining and marketing in the segment. Concluding the external environment, showing the main quotations on the chart. As you can see, just to summarize, when we thought that the situation on the gas prices is stabilizing and, you know, we will slowly leave the winter season in Q2. There was the war broke out and the disturbances returned. The average gas price remained at the average level of $174 per barrel of equivalent. As you can see on the right-hand side, the gasoline prices and crack spreads were not so heavily impacted as the diesel prices. One thing that is worth mentioning, as you will notice, the widening spread between diesel prices and the prices of heavy fuel oil. This will drive high profitability on our EFRA project, and this is something that we see in our refinery. Right now, I will hand my voice to Przemysław, who will guide you through the exploration and production segment. Thank you. Yes. In the first quarter 2022, oil prices, as Łukasz already said, continued to grow. The average price of Brent crude was at the level of over $100 per barrel. It was a significant over 26% increase quarter-over-quarter and almost 65% increase year-over-year. This significantly higher crude oil and gas prices contributed to clean EBITDA for first quarter 2022 with the amount amounted to PLN 540 million. Despite the reported decrease in volume sales. The production of hydrocarbons were at the level of 16,900 barrels of oil equivalent. It was 9% less year-over-year. It was due to some limitations in production, especially in Sleipner, Utgard, and we have early stage of Yme field. It's still stabilizing with some recent situation, but we hope to reach planned 5,000 barrels per day in near future. The decrease in reserves to 67 million barrels at the end of March from 73 million, that was a result of simply natural depletion usage of crude oil in the production. Sales of hydrocarbons lower by 5% quarter-over-quarter and 20% decrease year-over-year. Now we move to the producing asset in first quarter 2022. That first two on the left-hand side, Baltic fields at the Baltic Sea, B8 production 3,400 barrels, stable production, about same level comparing year-over-year. The field has the potential to produce more, almost 5,000 barrels. B3 also very stable production, almost same level comparing year-over-year, 2,000 barrels of oil equivalent daily. Currently under some reconstruction work, but we hope that thanks to this work, we will be able to keep such a level of production in next quarters. Now moving to some Norwegian assets. Sleipner, as I already mentioned, some limited production due to the compressor failure. Now we expect that we will have some revision of the production in the next months. Utgard 1.6 barrel of oil equivalent, Heimdal 1.9 barrel, Yme 1.8 barrel. Also I mentioned with some situation and some works related to the early stage of the field. It's still in, let's say, stabilizing stage. We do hope that, yes, that we will in the near future, we will reach the expected 5,000 barrel of oil equivalent for the five-year period. Some small production in our Lithuanian AB LOTOS Geonafta asset, 500 barrels. Few words about the new projects. NOAKA, with the interest of LOTOS, over 12%, and expected first oil in 2027. Trell and Trine, the second asset, almost 12% of interest for Grupa LOTOS and first oil 2025. On the Baltic Sea, B4, B6 gas field, also in the planning stage. Let's move to the next slide with the production figures. Due to this, production limitations, the average daily production in first quarter was less than 9% than in first quarter 2021, but slightly higher than in the last quarter of 2021. On the right-hand side, you have overall production in million barrels of oil equivalent, and you see the contribution of our regions. The biggest contribution, almost one million barrels from the Norway assets, almost 0.5 from Polish Baltic assets, and 0.04 from Lithuanian. Mix structure, generally, almost 50/50 gas to oil. Now we're moving to the reserves in comparison to the end of the year 2021. So from 69 to 67, as I said, natural depletion, the biggest depletion in Norway and one million and 0.5 million in Poland. Let's move to the operating results of the segment. So you see that in the first quarter 2022, over 220% increase comparing to the first quarter previous year. We are already elaborating on the reasons for that. EBIT Q1 PLN 444 million increased by the depreciation to EBITDA Q1 2022 amounted to PLN 540 million. As you can see, there is no one-off for quarter one. There was no impairment, no reversal of impairments on our upstream assets. That's all with the exploration and production, and we're moving to the refining and marketing. Yes, in this area, Łukasz was already elaborating on some macro. We see the growing demand for the energy carriers driven by this, let's say, post-pandemic recovery of the economy. Unfortunately, due to this pandemic situation, we faced limited supply and low stocks in Europe, so that made commodity prices up in the first quarter 2022. Another significant driver of this increase was surely war in Ukraine. The clean EBITDA LIFO for the first quarter 2022 was at the level of over PLN 755 million, comparing to PLN 444 million in the previous year. Thanks to this, of course, improved cracks on key oil products. We had maintenance shutdown of our refinery that was done from the first days of March until mid-April. There are still few more things to be done over next weeks, but the refinery is already in production phase. Clean EBITDA retail segment PLN 42 million in the first quarter, with a slight increase over 28% to the corresponding period previous year. High utilization. Again, this is something what Gdańsk refinery is reaching. Even the average utilization of the refineries is around 80%. That shows the flexibility of Gdańsk refinery, even in this volatile market condition. We processed 1.9 million tons of crude oil, finished products 2.5 million tons. This includes imported diesel oil and other products that we have to buy during the turnaround to fulfill all the contractual obligations. Structure of products, 58% of diesel oil, 13% of gasoline. The average model refining margin $17.2, and yes, I will move to that in the next slide. Significant reduction of natural gas consumption for refining process. We were also elaborating on that when we were talking about the last quarter of 2021 when we faced the high prices of gas. The refinery was able, thanks to this, the flexibility to simply replace the gas with other refining products and some intermediates, to decrease the usage of gas, especially in the periods with the high prices. Diversification of sources of crude oil supplies, especially in connection with outbreak of war in Ukraine. That's thanks to the refinery localization, the sea coast, together with the Naftoport capacity, and the flexibility of the refinery. That help us to adapt to some situation on the market. We are able to process huge number of crude grade. Successful implementation of the second part of the overall shutdown. A huge challenge for especially operating personnel. Over 50 of 65 units were closed, and that was finished mid-April and the production was restored. Let's move to the quarterly operating results of the segment. As I said at the beginning, clean before LIFO EBITDA for the first quarter was over PLN 770 million, with the contribution over PLN 40 million of the retail segment. It's over 70% increase comparing to the first quarter of 2021. EBITDA for quarter one, PLN 1.6 billion. LIFO effect negative minus PLN 840 million, with some small, one-off adjustment due to some foreign exchange differences. We are going to the last slide, model refining margin. What was already said that hypothetical profitability of the refinery based on market prices with the formula that is on the right-hand side. It simply does not reflect the actual margins that is generated by Grupa LOTOS due to some seasonal variation of prices, of course, the optimization adjustment, especially gas, what we already said. In the first quarter, the conducted turnaround, so we were not contributing at exactly the level that you see on the slide. That's all, and I hand over to Łukasz to the last part of the presentation. Thank you very much. Okay, let's summarize the results. Consolidated financial results for Q1 2022. As you can see, quite impressive earnings before interest and tax, but obviously they are contaminated with the impact of revaluation of our inventory. The jump in crude oil prices caused a negative LIFO effect of PLN 840 million, and this takes down our earnings before interest. There were almost no one-off transactions. We have corrected the results only with the exchange rate differences result of PLN 49 million and the positive impact on earnings before interest and tax of depreciation of PLN 327 million, brings the clean EBITDA LIFO for Q1 2022 to the level of over PLN 1.3 billion. It's worth to mention that we, you know, created the net profit of PLN 1.2 billion in Q1 2022. Something that we touched at the beginning of the presentation is the operating cash flow of LOTOS Capital Group, and this resulted with the PLN -400 million. As I said, turnaround maintenance is a challenge for all departments in LOTOS Capital Group. We see one of transactions that resulted in quite significant, as you will look at consolidated balance sheet, increase in our inventories just to secure the Polish market. From that perspective, from the perspective of the supply chain and from the perspective of our liquidity as LOTOS Capital Group during Q1 and during Q2, we stay very safe and solid. There are no challenges from that perspective. On the right-hand side, now we can see that capital expenditures resulted in PLN 300 million in Q1 2022. This is about 20% higher result than we observed during Q1 2021. We focus our capital expenditures in our exploration and production segment. As you can see, over PLN 100 million of capital expenditures in LOTOS Norge, and this was divided between many projects. We didn't focus on any specific one. PLN 163 million in refining and marketing segment. PLN 30 million connected with the turnaround maintenance. At the end, we have our retail segment with the PLN 20 million for Q1 2022. Balancing the cash flows with capital expenditures, we end up with our debt position. As I said, we consumed some of our liquidity surplus during Q1 2022, and resulted with an increase of net debt by almost PLN 900 million to the level of PLN 1.6 billion. Still, when we look on our gearing ratio, which is at the level of 0.1, and when we look on our net debt to clean EBITDA LIFO at the level of 0.3, we as the capital group stay very safe. The liquidity position for the moment is not a challenge for us. With this slide, I would like to end up the presentation and, as I hope, we can go to the Q&A session. Thank you. Operator, we are now ready to take questions. Certainly. Ladies and gentlemen, if you would like to ask a question, you can do so now by pressing star one on your telephones. That's star one if you'd like to ask a question. We will now take our first question from Łukasz from DM BOŚ. Please go ahead. Please go ahead, caller. Your line is now open. Łukasz? Hello, Łukasz Prokopiuk here. I have three questions. I understand that the company imported fuels in March because of the planned stoppage. The question is, what was the effect on EBITDA from such trading transactions? Did it have a big impact on the quarter or not? Second question is, could you explain again, because I didn't actually hear everything you said on the upstream volumes, crude oil volumes. Why were they so low in the quarter? First question, could you please shed some light on your crude oil import costs? I mean, could you tell us what is the structure of imports? What is the, how is, how do you capture the Urals blend differential in the current quarters? Could you just give us some information because it's the most important driver and we have very limited knowledge on this topic. Thank you. Okay. I will take the first question, Łukasz Minuth. As I understand the question correctly, it was about what the result and the impact of clean EBITDA LIFO of our import transactions. From our perspective, of course, we won't provide you with a detailed number because this is trade information. From our perspective, we first of all have to secure our long-term contracts during the turnaround maintenance. From that perspective, this is our main driver. On the other hand, those transactions cannot be profitable. At the end of the day, you have to keep in mind that we won't realize any production margins, any crack spreads from such transactions. The only thing that is remaining and the only thing that has impact on the EBITDA level is the inland, possibly inland premium corrected with the shipping cost. From that perspective, we can say that those transactions, they do not have major impact on the EBITDA level. They obviously have impact on our operating cash flows because we can see that there are quite big differences in the payment periods from the crude oil transactions and the import of finished goods. I think that Przemek will answer the question two and three. Yes. About the oil volumes, I understand that it's mainly, I mean, the decrease in the oil volumes from our upstream activities are mainly related to the Norwegian assets because the B8 and B3, as I said, are working on a very stable level, as I said, almost same comparing year to year. Even though that B3 is under some reconstruction work, we were able to keep the production. When we going to the Norwegian assets, that's true. We had some situations in Sleipner. The Sleipner production was limited due to some compressor failure and some corrosion. After the, of course, announcement of the operator, we do have some information that the restoration of the full production might take even to six months and that it's amounted to, let's say, 30% reduction of the target output from Sleipner in 2022. We do hope, yes, that the operator will be also able to restore it faster. Generally, average output of the Norwegian assets in the fourth quarter was 11,000 barrel average daily for the LOTOS, of course, and that contributed to the decrease of 13% year-to-year. The Heimdal asset is working at the same level. Yme asset is, as I said, in the very early stage, and we also facing some situation there, but we don't have any official information from the operator, so I cannot give you some more information on that. We hope that, yes, that it's the stabilizing process and it will be, let's say, we would go to this 5,000 barrel of oil equivalent daily soon. To the first question, so we are not giving to the public the information on our crude oil mix, unfortunately. I won't be able to give you this information as that's highly sensitive and this is strategic decisions in this to build some competitive advantage. Therefore, we cannot elaborate more on that. Thank you. Thank you very much. Thank you. We will now take our next question from Tomasz Krukowski from Santander. Please go ahead. Hello, everyone. This is Tomasz Krukowski, Santander. I have also three questions. The first one, this is follow-up on the upstream on the Sleipner situation. This compressor failure, it happened in March or was it earlier? This is the first part. Second, you said that Yme should be producing 5,000 BOE per day soon. Soon, does it mean this year or maybe later? This is the first question. The second, could you please update on the maintenance outage which you are right now undergoing? What stage are we at this point, and where do you expect your refinery to be fully up and running? The third question, yeah, I would like to again touch upon your intake and supply structure in the future. Do you expect your crude costs to increase substantially versus Brent because of the shift from Urals to other grades? That's all. Thank you. Okay. I will take the first question. Yes, the failure of the compressor in the Sleipner area was detected in March 2022, and the situation with some corrosion in April 2022. Okay. Moving on to the second question. Moving on to the Yme project, I will comment on that. Currently, because this is quite fresh information for us, we are receiving information and that was an announcement from the license operator, Aker, that they observed some leakage on the subsea installation. From that perspective, for the moment, we do not have a precise information what is the revision of the production, what is the revision of the schedule for the Yme project. That's why, Przemysław and this is our perspective for the moment, said that we still believe that 5,000 barrels of oil equivalent is possible, as long as we have no further information. From our perspective, of course, as we will receive any technical information and any perspective, we will prepare such a revision, first of all, internally, then we will consult this with the field operator. The status for the moment is that this is a quite fresh information. It came out during the Easter holiday. We were getting closer to the facts, and we will of course review the production perspectives for 2022. Moving on to the question number three and turnaround maintenance. We are happy to say that this is behind us. At the eighteenth of April, we finished the maintenance turnaround. It was in line with our schedule, in line with our budget. I would say that this is success that we will communicate during the Q2 results. From that, I would hand over the voice to Przemysław to question number four, or I can comment on that because this is the question to the oil prices and the cost structure during next periods. Obviously, this is a very turbulent situation. It's very hard to predict on the costs. We, as Przemysław said, oil prices, the structure of production is very sensitive from that perspective. At the moment, this is the most important strategic decision in refining and marketing segment. It would be very difficult to give you any guidance on that. I would wrap up the answer with this conclusion. Thank you. As a reminder, if you would like to ask a question, please do so now by pressing star one on your telephones. We will now take a follow-up question from Tomasz Krukowski from Santander. Please go ahead. Hi, it's Tomasz Krukowski, Santander again. Just one question. Your working capital, do you expect the investment you made in inventory to reverse over the course of the second quarter? First of all, once again, Łukasz Minuth, the answer is yes. Obviously, when we focus on securing the internal market from the perspective of almost one month of no production, and we see that the quarter ends exactly at the middle of the maintenance turnaround, then we can face such an increase in our inventories. On the other hand, we have of course the war situation in Ukraine. From that perspective and from the information that are surrounding us regarding the lower availability of crude oil, lower availability of diesel products, we can expect that we will be a little bit more conservative when managing the working capital. Just to give you a short and quick answer, yes, we expect that we will see a reversal during the second quarter of 2022. Thank you. If I could ask one more follow-up question, and if you could comment on the level of commercial margins for inland premiums that you observe currently on the market, both in diesel and gasoline. Yes, of course, we observe the market. We saw that, or maybe a little bit different, somewhere around the war outbreak in Ukraine, and when we had a very high consumption of main products, there were quite a big increase on the margins on the Polish market. This is obvious. That was obviously connected with the high consumption that we saw on our petrol station. I would say that we touched this fact of panic on our local market. The situation stabilized during next weeks and the inland premiums went down, but still at the moment, they are very satisfying and good margins that we see on the Polish market. Thank you very much. Thank you. There are no further questions at this moment. I will turn the call over to your host. Thank you, operator. Since we answered all your questions, thank you for joining the conference, for being here with us today. We wish you a good day, and the recording will be available on our website today. Thank you. Bye-bye. Ladies and gentlemen, that will conclude today's conference. You may now all disconnect.