Orlen (PKN) Strategy Update (Q&A) summary

Strategic priorities and transformation

• Four strategic pillars: Upstream and Supply, Downstream, Energy, and Consumers and Products, focusing on pragmatic, flexible energy transition and ecosystem integration across segments.

• Gas remains a key transition fuel, with plans to deliver 27 bcm to Poland by 2035 and expand upstream in Poland, Norway, and potentially North America.

• Decarbonization targets include reducing upstream and downstream emissions by 25% and energy segment emissions intensity by 55% by 2035, with a complete exit from coal in power generation by 2030 and in district heating by 2035.

• Renewable energy capacity to reach 13 GW by 2035, with significant investments in BESS, SMRs, and hydrogen infrastructure.

• Customer integration and digitalization are prioritized, aiming for 10 million loyal users and a 33% EV power market share by 2035, with 6,000 ultrafast EV charging points.

Financial framework and capital allocation

• EBITDA expected to grow at 5.5% annually, from PLN 33 billion to PLN 53–58 billion by 2031/2035, with Energy and Upstream segments as key contributors.

• CapEx and M&A are front-loaded, peaking in the first five years, then declining to PLN 15–18 billion by the end of the strategy term, with average annual CapEx of PLN 32–35 billion.

• Investment priorities: Upstream and Supply (gas transition), Downstream (new chemistry, decarbonization), and Energy (renewables, SMRs).

• Leverage to peak at 1.4x net debt/EBITDA in 2027, with a strict cap at 2.0x and a target to deleverage to 0.5x by strategy end.

• CapEx flexibility is high, with maintenance and regulatory CapEx deemed committed, while growth and M&A CapEx remain discretionary.

Capital management and partnerships

• Hurdle rates set: 10–12% for volume optimization, 7–9% for innovative/sustainable projects, 8–10% for asset optimization, differentiated by emission impact.

• Partnerships are key in Upstream (Norway, North America), Downstream (alternative fuels, hydrogen), and Energy (offshore wind, BESS), with a focus on accelerating innovation and de-risking investments.

• M&A and partnerships expected to total PLN 85 billion over the strategy term, with flexibility in execution based on market conditions.