UPDATE 2-PKN pushes on with disposals, eyes tougher Q3

* Seeks investors for Polkomtel, Mazeikiu

* Refining margins down to $2.7 per barrel in Q3

* Q2 net loss at 5 mln zlotys vs f’cast 55 mln profit

(Recasts with planned exits, adds quotes, details, background)

By Patryk Wasilewski

WARSAW, Aug 31 (BestGrowthStock) – Poland’s top refiner PKN Orlen
(PKNA.WA: ) is pushing ahead with plans to sell its stake in
mobile operator Polkomtel [PTL.UL] and stepped up the search for
investors for its troubled Lithuanian refinery unit.

PKN will make a preliminary decision on the fate of its
loss-making Orlen Lietuva unit in September, PKN’s chief
executive Jacek Krawiec said on Tuesday.

The refiner’s advisor Nomura has already started feeling out
the market for prices from potential buyers, PKN’s chief
executive told an analyst conference call.

“We now have to test the market to see what the appetite is
like and for how much we can sell the refinery,” Slawomir
Jedrzejczyk said.

PKN is mulling an exit, entire or partial, from the
Lithuanian refinery it bought for over $2 billion, as the plant
has failed to generate expected profits due to oil supply
troubles, which have only increased its costs.

PKN has been negotiating with the Lithuanian government
deals that would cut transportation costs for both crude oil and
finnished products, but the talks have ground to a halt.

The Lithuanian government declined to comment on the issue.

Krawiec reiterated PKN along with other Polish shareholders
of the country’s top mobile operator Polkomtel — KGHM
(KGHM.WA: ), PGE (PGEP.WA: ) and Weglokoks, will start a
pre-marketing procedure of the 75 percent stake in the fourth
quarter.

“We still believe the sale can take place in first half of
2011,” Krawiec said on a press conference.

RESULTS

PKN swung to a surprising net loss in the second quarter as
weaker Polish currency losses weighed on the value of its debt.
The state-controlled group lost 5 million zlotys ($1.6 million)
compared to 55 million profit seen in a Reuters poll.

PKN’s operating result nearly doubled to 1.12 billion zlotys
in the quarter thanks to rising margins and refining volumes,
but already the situation in the third quarter deteriorated
adding pressure on results.

The refining margins dropped in the third quarter to $2.7
per barrel from $4.7 per barrel in the previous three months, it
said in its quarterly results presentation.

The Ural/Brent differential, or the spread between the
cheaper oil it refines and more expensive one used to benchmark
its sales, dropped from $1.8 to $1.5 per barrel.

“We see a deterioration in third quarter margins compared to
second quarter, but we cannot say this is something entirely
unexpected. We did expect only a modest recovery in operating
conditions this year and this is what we are seeing,”
Jedrzejczyk said.

PKN shares were down 0.7 percent at 1505 GMT, having fallen
as much as 1.7 percent during the session, and was
underperforming Warsaw’s main index WIG20 (.WIG20: ).
(Editing by Mike Nesbit)
($1=3.170 Zloty)

UPDATE 2-PKN pushes on with disposals, eyes tougher Q3