Cross border merger between Orlen Upstream and Orlen Upstream Int.

Orlen Upstream deals with exploration and prospecting of hydrocarbon deposits. Photo: PKN Orlen

A company belonging to PKN Orlen dealing with crude oil and natural gas exploration and production called Orlen Upstream, seated in Warsaw, will merge with its subsidiary company Orlen Upstream International seated in Amsterdam (the Netherlands), in which it holds 100% share.

PKN Orlen SA is a Polish oil company, listed on the Warsaw Stock Exchange, operating six refineries and the region’s largest network of service stations located in Poland, the Czech Republic, Germany and Lithuania. The company deals with processing crude oil into gasolines, diesel oil, fuel oil and aviation fuel, being also a leading producer of petrochemicals and products being used as basic feedstocks by a large number of chemical companies.

The Orlen Group consisting of more than 40 companies in total, has been gradually transformating into an energy conglomerate, consistently developing its hydrocarbon exploration and production (upstream) as well as power segments.

Orlen Upstream, a 100% subsidiary of PKN Orlen SA, with its headquarters located in Warsaw was established in 2006. The company deals with exploration and prospecting of hydrocarbon deposits, including extraction from unconventional deposits, exploration of crude oil and natural gas, as well as providing services related to exploration and production of crude oil and natural gas.

Orlen Upstream conducts economic activity in Poland and Canada, where it acquired access to Canadian deposits of gas and oil in 2013 thanks to acquisition of a Canadian extracting company TriOil Resources. Since 2015 the company has been functioning as Orlen Upstream Canada. The purchase had been executed through the company Orlen Upstream International, which became an absolute owner of the TriOil.

Orlen Upstream International is a Dutch limited liability company seated in Amsterdam, incorporated in 2013, which acted mainly as holding company. All shares in its initial capital are owned by Orlen Upstream.

The merger of the two companies from Orlen Group will be executed by transferring all the assets of Orlen Upstream International to Orlen Upstream – the company stated in the plan published by it. The merger based on cross-border procedure regulated by the EU directive of 2005 applicable to capital companies of the EU member countries will take place after approval of the management board of Orlen Upstream International and supervisory board of Orlen Upstream.

“The result of the merger between the companies will be transfer of all the rights and obligations of the acquired company to the acquiring company by universal succession, and cessation of existence of the acquired company” – was announced in the plan of merger between Orlen Upstream and Orlen Upstream International. The date of merger will be the day on which the merger between the two entities will be registered in the National Court Register.

According to PKN Orlen, its own resources of crude oil and natural gas (definite and potential) at the end of the first quarter of 2016 amounted to 97mln boe (barrels of oil equivalent), including 8mln boe in Poland – gas and in 89mln boe in Canada – oil and gas.

Orlen Upstream recorded a loss amounting to PLN 790 821 000 in 2015. The company admitted in its financial statement that the loss was a result of “recognition of non-monetary write-offs resulting from impairment of assets of the company” – for example, in connection with low prices of hydrocarbons on international markets including Canadian market the write-down on shares in Orlen Upstream International was recognized in the amount of PLN 444 236 000.

The published financial statement of Orlen Upstream International suggests that in 2015 the company recorded a loss of net Euro 104 065 300. Value of the company understood as the book value of its net assets was estimated in the middle of April at Euro 368 739 448.

Due to the decision of Orlen Upstream concerning  abandonment of exploration of oil and gas on the Latvian shelf of the Baltic Sea, in 2015 a company International Exploration and Production seated in Amsterdam was dissolved – Orlen Upstream held 100% shares in its initial capital.

Previously, in December 2014 a company Balin Energy seated in Riga, established for oil exploration in the Latvian shelf of the Baltic Sea, was also dissolved. The decision was dictated by results of a boring performed a year earlier, which indicated unsatisfactory level of saturation of rocks with oil. Joint venture partners – Orlen International Exploration and Production and Kuwait Energy Netherlands Cooperatief had 50% of shares in Balin Energy.

GL (source: Polish Press Agency)

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