PKN Orlen writes down approximately $110m on Canadian assets

PKN Orlen, a Poland-based integrated oil company, has taken a writedown of approximately $110m on its Canadian assets as the worth of the petroleum reserves have become less due to the shrinking global oil prices.

Orlen acquired Canada-based TriOil Resources for $240m ($193m), which included debt, in September 2013 and later added Birchill Exploration, another Canadian firm bought in May 2014, reports Calgary Herald.

The company in the financial results for the last three months of fiscal 2014 stated: "An impairment allowance of assets recognised in the IV quarter of 2014 in accordance with IAS 36 – impairment of assets amounted to PLN 331 million (Polish zloty) and related mainly to assets of the Orlen Upstream Group in Canada.

"As at 31 December 2014 the fair value of evaluation and extraction of mineral resources assets in Canada was based on the estimated crude oil prices and reserves evaluation prepared by an independent company engaged in the evaluation of the reserves in accordance with professional standards for the Canadian market."

During the fourth quarter, the company had seen the Canadian production touch 8,000 barrels of oil equivalent and had drilled nine wells.

Even as the low prices continue, the company plans to invest in drilling.

"In Canada, in 2015, PKN Orlen intends to increase the average hydrocarbon production to 8.9 thousand boe/d," it said. "The plans will be implemented with due account being taken of the dynamic changes in the macroeconomic conditions and their effect on oil prices."

Earlier, Orlen had said that it planned to grow the Canadian production to 20,000 boe/d by 2019, reports the publication.

Prior to the TriOil acquisition, Orlen generated majority of its revenues from oil refining and petrochemical units and retail fuel sales.

The Government of Poland has 27.5% stake in Orlen, which employs over 21,500 workers.