It's ticking. We're just past 8:00 A.M. This is the time for the morning coffee with ORLEN to discuss Q1 results for the 2026. Here we gathered in ORLEN headquarters. The meeting will be hosted by Sławomir Jędrzejczyk , Company CFO. Together with the CFO, who is sitting in the room, my name is Jakub Frejlich. I'm Head in Investor Relations. We have Damian Wieczorek, Head of Group Controlling. We have Marcin Piechota and Konrad Włodarczyk from Investor Relations team. We do have Head of Treasury and Finance on the call from our side, as well as Jacek Matyjasik, as well as Slawek Radon, Head of Strategy of the Group. As usual, we're going to discuss the presentation, supporting slides will come after. We'll have a Q&A session. We're ready to go. Okay, Sławomir, the floor is yours.
Thank you, Kuba. Good morning, ladies and gentlemen. It's my pleasure as ever to present ORLEN quarterly results. First quarter, as we all know, it was very extremely challenging and unprecedented in the oil and gas industry. I am very glad to say that we proved we have resilient business model, and we can quickly adapt to very volatile market environment. Our key focus in March was to secure supply of crude oil and gas and ensure availability of the products, especially diesel, to our clients. We are very proud that we did it. The situation in the second quarter is still volatile and unpredictable. It's really difficult to say whether this situation in the nearest future will normalize, or we need to adapt to a kind of new normal situation. We continue our strategic projects, and on slide number two, we name a few of them.
First of all, in upstream, we continue discoveries, especially in Norway, to prevent production drop due to depletion of our deposits. We acquired two new LNG carriers, altogether we have now eight carriers. In downstream, as you know, because we published the announcements, we finalized the scope of work, the schedule, and the budget, an updated budget of New Chemicals projects. We signed an agreement with general contractor to settle the past, now we are ready to continue these projects. I can just confirm this is absolutely top priority for our company. This is the largest project within our portfolio. Still three years to go and almost PLN 20 billion to be spent. Definitely, we are very glad that this is on track. However, this is absolutely of significant importance to our company. The second is a preliminary agreement to acquire Grupa Azoty Polyolefins.
I can just confirm that we await anti-monopoly approvals to conclude the transactions. In the base case, it should happen in the third quarter this year. Regarding consumer end products, the key challenge for us was increased prices of our products, but we have a very good non-fuel offer. That's why we can implement promotions. PLN 0.35 promotion in Poland till the end of August. This is weekend promotion. In energy, we continue our offshore and gas-fired power plants projects, and at the same time, our distribution network is modernized. We modernize and build new electricity grid at over 1,000 km and connected more than 200 MW of renewable energy.
From finance point of view, our situation is very stable. That was proved by Moody's, that confirmed A3 rating with stable outlook. That's why, as management board, we're ready to propose the highest dividend in the history of ORLEN, which is PLN 8 per share. We await general assembly approval of the final level. We are ready to pay dividend in June, as we proposed in our recommendation. Now let's move to slide number three, where we present key financial metrics. Revenue PLN 75.8 billion. That was due to the fact higher than the previous quarter, due to the fact that we've had higher sales volumes, as well, of course, higher prices of hydrocarbons and of our products. EBITDA LIFO, I believe good results with better sales. However, we need to admit that this impact is due to better macro environment and better margins.
Cash flow from operations, good result, however, lower than the past quarters, and that was decreased by working capital and hedging deposits increases. As regards CapEx, PLN 5.4 billion. Usually, the first quarter is the lowest one. We booked a lot of invoices at the end of last year, that's why it's just PLN 5.4 billion. However, we confirm our initial target we presented during the fourth quarter call, which is roughly PLN 36 billion for the full year. Net debt to EBITDA, we improved our cash position by PLN 600 million within the first quarter of 2026. Now let's move to slide number four, where we present our operational parameters. This slide, as you know, is our key focus. We are proud to say that our operational targets are being delivered.
Starting from upstream supply, there is a slight drop in our high hydrocarbon production, but this is a normal depletion of our deposit and some plant and unplanned maintenance works. However, I can confirm our target for the full year, which is the same level of production as 2025. There was a cold winter in January and February in Poland, that's why wholesale sales improved by 22%, which is a very good result. We mentioned here LNG deliveries from U.S. This is really diversified sources of delivery gas. As you know, currently we have two contracts with Cheniere and Calcasieu Pass, roughly 4,000,000,000 cu m . In the fourth quarter, I can confirm that we expect to have the second contract with Venture Global from Plaquemines of 5.4 billion yearly cubic meters. Of course, the full impact we can observe in 2027.
In 2027, there is the last contract with Sempra of roughly 1,300,000,000 cu m . As regards downstream, better refining utilization capacity and crude oil throughput by 1 percentage point. This is mainly in Poland, 4%, and slightly lower in Czech Republic and Lithuania. As a result, wholesale fuel sales, petrochemical sales improved by 4%, 8% respectively. Energy sector, definitely we took advantage of cold winter. As you can see, electricity production, 10% increase. Heat production, 11% increase. Electricity distribution, natural gas distribution by 6% and 12% respectively. We continue to have more share of zero and low-emission capacity. Currently, we have 64.3%. That's more than 4 percentage points increased as compared to last year. Consumer end products, we need to say that the consumption slightly drop on our markets. However, our retail fuel sales improved by 2%.
Additionally, efficiency of fuel stations, meaning lowering break-even margin, increased by 2%. That's due to the fact that, of course, we keep costs under control, but at the same time, our non-fuel offer is very, very attractive. As regards retail, gas sale, and electricity, similar situation to the energy. Cold winter helped to achieve better volumes. Now, let's move to slide number five, where present our EBITDA delivery. That proves that our business model is very resilient and diversified. We delivered PLN 14.1 billion, which is PLN 2.6 billion better result than last year. Starting from upstream. In upstream, the result is lower by PLN 500 million. That's due to lower results in upstream of roughly PLN 600 million, due to the lower gas quotations. Higher supply results by PLN 200 million due to increase in wholesale gas volumes.
Lower margins on gas sales, however, with surplus offset by hedge and exchange rate effects. In Downstream, improvement by PLN 2.2 billion, similar results to the fourth quarter. That was, first of all, due to the refining improvement, PLN 1.8 billion. Definitely, we took advantage of higher cracks and revaluation of our inventory, but that was partially limited by impact of hedges and strengthening of złoty against U.S. dollar Trade margins were lower, but that were fully offset by usage of historical inventory layers. In Petrochemical, we are almost break-even, so we improved our results by PLN 300 million. That's the result of increase in sales volumes by PLN 200 million and positive impact of strengthening of euro against U.S. dollar. Energy, PLN 4.7 billion. That's PLN 400 million improvement as compared to last year.
In conventional energy, that's PLN 200 million, mainly due to increase in production and sales of heat and electricity. In distribution, that's PLN 200 million increase in gas and electricity distribution volumes. Slightly offset by lower margins on gas distribution and electricity, and increase in tariffs on gas transmission services and electricity. As regards consumer end products, PLN 1.7 billion, PLN 400 million improvement, that's PLN 200 million in retail, fuel, and convenience. Higher non-fuel margins and increase in sales volumes. As regards the margins, fuel margins, those are comparable to last year. Drop in Poland and higher in Germany, Czech Republic, and Austria. As regards retail, electricity, and gas, an improvement on PLN 200 million, that's a result of increase in sales volumes in gas and electricity. Let's move to slide number six, where we present our CapEx.
We continue all our projects. We described during our fourth quarter presentation, on the right-hand side on this slide, we name all of them. I can just confirm that this is our focus, and we continue to deliver those investments. As I said at the beginning, PLN 5.4 billion is a kind of starting point, evenly spread across upstream and supply, downstream and energy. Let's move to slide number seven, where we present our cash flow. EBITDA LIFO for PLN 14.1 billion, LIFO effect, we have two quite significant items that decrease our cash flow from operation in the first quarter. Working capital, PLN 2.9 billion, of course, due to more volumes and higher prices. Of course, once this situation stabilizes, we may expect some form of reversal of this allocation. PLN 3.9 billion, this is valuation of our deposits.
Probably I should do a pause here because very rarely we discuss in detail the hedging. I would like to explain a little bit more what's happening in our company. As you all know, we have very complex hedging policy. We hedge gas, crude oil, refining products, interest, CO2 certificates, foreign currency, and we explain our hedging positions in the notes to the financial statements. Especially, I advise you to look in detail into the note of full year 2025, where we explain in detail our position. In the first quarter, there is a special note number 5.9, where you can observe what are the opening position in our hedging policy. What I can add is that we use hedge accounting, and there are transactions straight into the P&L. March was very volatile, as we know. From that perspective, the forward curve changed.
That's why we increased our deposit by PLN 3.9 billion. If you look into our balance sheet, our deposits at the end of March is PLN 4.2 billion. Those deposits are mainly on ICE, meaning Intercontinental Exchange, and in Polish Commodity Exchange as well. Net position at the end of March is PLN 1.7 billion liability, of course, we are not in a position to say what kind of development of the market we'll observe in the nearest quarter, and what kind of hedging impact on our P&L is going to be. Definitely, our strategy is to flatten the volatility of the results. There is a slide number 17 in our presentation, in appendix, where we present what is the impact on P&L. We may say that in the first quarter 2026, the net impact of our hedging is roughly zero.
A negative impact in downstream, positive impact in upstream, and that's all I would like to say. I believe that can be useful to explain this PLN -3.9 billion cash allocation to our deposits. As a result, operating cash flow PLN 8.5 billion, that was decreased by investment cash flow. As I presented on the previous slide, CapEx was PLN 5.4 billion, and you can see here PLN 7.5 billion. That's due to the fact that we booked a lot of invoices, as regards investments in the fourth quarter. In the first quarter, PLN 2.1 billion. You may say that's payables payment from 2025. As a result, we improved our cash position by PLN 600 million. Let's move to slide number eight, and that's the evidence of our strong balance sheet and liquidity position. We have diversified sources of financing. We have average maturity of seven years.
That currency structure is optimal, we believe, towards our operational exposure. This is very good news. This good financial situation helped us to propose the highest dividend, as I said, of PLN 8 per share. Let's move to slide number nine. This is the final slide of my presentation, key initiatives for 2026. I would like to just emphasize again that we have basically three areas of focus, which is growth, operational excellence, and financing. From the growth perspective, definitely our investment program execution is priority with budget discipline, project management excellence. This year, we expect technical commissioning of Baltic Power Offshore Wind Farm. We expect commissioning of CCGT Grudziądz and first fire in Ostrołęka. As regards Grupa Azoty Polyolefins, I already said that we expect third quarter this year to get anti-monopoly approvals.
Next year, we are going to just conclude the maintenance work and the completion of the factory, and next year, we will include Grupa Azoty Polyolefins into our structure. Operational excellence. Again, we proved that we are resilient. I would not say that we are agile. It's difficult to say that such a big corporation like ORLEN is very agile. However, we proved in March and April that our organization can react accordingly, and speed is according to necessary situation. This is definitely our focus, building resilience and agility through operational excellence. Secured and well-diversified supply of hydrocarbons. We proved that we have this policy in place. However, this is and will be our key focus for the next weeks and quarters. Focus on maximizing asset utilization with plant maintenance shutdowns.
I can just say that this quarter, second quarter of 2026 is one of the highest impacted by maintenance shutdowns. We have this usual once four, five years turnaround in Płock refinery that affects refining and petrochemical part. We started that. I believe will be okay, and will be concluded by the end of June, beginning of July. From financing point of view, of course, we focus on generation cash and keeping this optimal financing structure. We step by step issue new bonds to refinance our previous bonds, and we focus on obtaining funds from national and European funds. That's all from my side at this stage. We are ready to take your question to further explain our situation. Thank you so much.
Yeah, thank you. As usual, we would like to ask you to raise your hands, and we'll be kicking off with Łukasz Prokopiuk from BOŚ, who was the first. Łukasz Prokopiuk , please.
Yes. Hello, can you hear me?
Yes.
Okay. I have three questions. First two short questions. What is your current share of Arabian crude in your consolidated throughput? Any additional comments will be very helpful here. The second one, I think you recognized a PLN 752 million loss on crude oil trading. Why such a big loss, given that the Arabian crude was expensive only in April, became expensive? Could you explain this item? The last question, maybe I'll ask it after the first two.
Thank you, Łukasz. Saudi Aramco is always roughly between 40% and 45%, that remained at that kind of levels. This crude trading, I would not say this is a loss. What we present is basically that we pay higher for the crude, that means that differential is on top of that, and that, what can I say?
The thing is that I think your differential was positive in the first quarter, and yet you recognized higher losses.
Which amount do you refer to? Because you said PLN 7 million.
In your Excel file, if I read correctly, I would need to find it now, but I think you recognized PLN -752 million EBITDA, yes, on crude oil trading.
If you allow me just to look into this Excel, and we'll explain offline, okay?
Okay.
I don't have this amount in mind, actually.
Well, I see it now in your Excel. It's exactly the amount.
I will just double-check because it may be impacted by hedging as well, but I don't want to mislead you at this stage.
Okay.
If we can take this question offline.
Okay. No problem.
Okay.
Okay. Last question. A big question, general question on Petchem.
Yes.
On the current macro, is it a one-off? Is it sustainable? Could you comment on fertilizers, and especially in the context of the upgrade in Anwil? Could you comment on Nowa Chemia, on the expected EBITDA margins and maybe asset impairments in the context of the improvement in macro? Maybe could you comment on Azoty Polimery in the context of improving Petchem macro? Big question, but thank you.
I know. Thank you very much. I can just say that really we did a big bet on Petchem. That's true, because we continue New Chemicals project, but this is going to be due 2030. Within the next four years, let's say.
Yes.
We expect to conclude GAP, which is going to be in operation within one year and a half, probably after we complete all the necessary works. We have Azoty upgrade, which started actually in April. What can I say? Of course, I can say that it's too early to predict the kind of long-term view. However, this is a positive information for us if the situation develops that will be better than everyone expected a few months ago. However, this is too early to say. We did not upgrade our long-term forecast. Probably during our update of strategy, we'll look into the macro environment long run, and then we will present our focus. As you know, higher prices affect consumption as well. There are definitely very good margins in Petchem currently. However, I believe the market need to adapt to the high prices.
We observed, of course, pressure on volumes because the clients want to wait a little bit and see whether normalization is going to happen. Of course, they cannot wait forever. They can utilize inventories they have, and one day, we believe the volumes will come back in the previous levels, but it's difficult to expect when. I know that this is a very general answer, but at this stage, I would not draw long-term conclusions. That's positive for us. However, let's wait a few more months how the situation develops.
Okay. Thank you.
Thank you.
Thank you, Łukasz. The next in line is Piotr Dzięciołowski , Citi, please. We can't hear you, Piotr.
Hi, yes. It's Piotr Dzięciołowski from Citi. Can you hear me now?
Yes.
Yes. Hi, good morning, everybody. I also will have three questions. First of all, I wanted to ask you about this windfall profit tax. What is your estimate about the number? Is it going to be PLN 6 billion? What assumptions you have to use to get to PLN 6 billion? Any color of how you see the run rate of this windfall tax being applied to March, April, and May at the current margins? That's the first question. Maybe you can say what's the reference, this margin that they talk about, that is 20% uplifted margin from last year. Any details would be helpful. Second, I wanted to clarify on the dividend. You proposed PLN 8 per share, and is it fair to assume this is a progressive dividend?
A dividend proposed from a 2026 and 2027 profits will be PLN 8 +, or you see a normalization or decline of a dividend? What's the trajectory going forward? Finally, I wanted to ask about Energa. You're raising capital at Energa. What is going to be your share in the overall capital following the capital increase, and do you see a squeeze out of the minorities there? Thank you.
Thank you so much. As regards windfall, I can only say that we expect the draft act, which supposed to be announced soon. We look carefully into this. Draft act does not mean that this is going to be the final version. Our position as a company is to wait for the final version, which is going to be approved by the government, then we will recalculate and say to the market our estimations of the impact. Sorry for that, we try not to comment any initial estimations. As regards dividend, of course, we have dividend policy in place, which is up to 25% on cash flow from operations decreased by interest. You know my position. I believe we should be dividend-paying company. We should focus on cash generation.
Once we generate cash, of course, we should pay adequate dividend, having in mind we have investment program in place. Again, sorry for this, but I am not in a position to tell you whether next year we should expect more than PLN 8 , definitely our capital structure, as we know, is not optimal. We have a cash position currently. I would expect dividend is key priority. What kind of level? Let's wait till the end. I mean till the beginning of next year. As regards Energa, yes, that's true. We decided as a majority shareholders to just inflow some capital to improve the structure of the company so that Energa can continue investment programs. We expect 1st of June is the conclusion of all the shareholders to announce what kind of shares they're going to acquire.
At the beginning of June, we should know what kind of percentage we will have. As you know, sorry for this again, this is stock-listed company. We're a stock-listed company, we will announce our next steps, if any, in due course.
Can I ask you a short follow-up on this Energa? What is the book value of Energa capital on your books like? Given I heard there were some recent changes on the squeeze out that essentially the minorities can now or expect a fair value being offered. I just wanted to compare, where is the share price versus your book value and whether you'd be afraid that there's endless litigation against you that you're not willing to pay the fair value. The book value is probably the fair assumption of what you think this company is worth, no?
We have two numbers which are officially published, as we know. Last year, we just announced readiness to acquire shares at the price of PLN 18.87, as far as I remember. Now there is a shareholders share capital increase of PLN 18+ as well. Those are two numbers which are roughly PLN 18 +. We will double-check what's the book value in our company. This is, I guess, lower because we acquired, as you know, in the past years. Again, sorry, I'm not going to follow up this answer as regards our any strategy, if any strategy regarding our next steps.
Sure. Thank you very much.
Thank you.
Yeah. We'll revert back to you on those questions offline straight after the call. Now we can move on to Anna Kishmariya from UBS. Please, Anna.
Good day. Hopefully, you can hear me. Thank you very much for the presentation. Couple of questions from my side. Starting with the utilization rates, as you mentioned, the second quarter is heavy on the maintenance side. What level of group utilization we should expect on the refining assets? Also, on the crude availability, do you experience any issues to secure that, or is it fully available? I will come up with some more questions after this one.
Okay. Thank you so much. As regards utilization, we expect a slight drop in utilization rate, roughly 90%, so similar levels as the first quarters. As regards crude availability, as I said at the beginning of the presentation, we are very proud that we have diversified sources of financing. We have Saudi Arabian, we have crude from Norway, from all different sources. Currently, we don't see any issues regarding delivery crude. Of course, this is always question of price and the premium we need to pay. We will present during our quarterly results what the kind of net impact of that market situation is on our results. Definitely, we don't have any crude problems so far.
Thank you very much. Regarding the New Chemicals project, after the finalization of the budget and the project further moving ahead, do you expect to stop impairments, this quarterly impairments of the CapEx, or should we expect it to follow? My final question will be around the Polish gas tariff prices. For July, when there will be an update, do you expect the tariffs to still go down despite the current market environment? Thank you.
Thank you. As regards New Chemicals project, I did not mention during the presentation, in the first quarter, we booked PLN 1.1 billion impairments, out of which basically PLN 1 billion is New Chemicals project. For the next quarters to come, I would expect that impairments will be still in place. Our budget for New Chemicals this year is roughly PLN 6 billion. I would expect that this year still, the whole amount will be impaired. What happens in the next quarter, we will see. If there is any update of our strategy, if there is any update come referring to Łukasz's question on the macro assumptions, of course, we will announce when we are ready. For the time being, the base case, I would expect that the whole amount, PLN 26 billion, will be still impaired.
As regards Polish gas prices, that's true that we expect a kind of new tariffs in place. Again, we expect once we see the new tariffs, of course, we can comment. It's difficult for us to say at this stage what kind of levels we can expect.
Thank you.
Thank you.
Thank you, Anna. We can now move on to Tomasz Krukowski from Erste for the first time. Tomasz , please.
Hi, Tomasz Krukowski, Erste. Just one question. What is the cost of the crude which resource at this moment? I'm just wondering what kind of premium on average should we expect you to pay in the second quarter? We know what the Arab Light is trading at, we do not know how effective you are in also switching or sourcing the other crudes and what the price are you paying.
Okay. Thank you so much. Of course, as regards crude, that may be worth commenting as well that March was positive because, of course, we signed the crude in the one or two months ahead. In the second quarter, we will see this increase of premiums on crude oil, and I would expect that it's still single-digit number, so closer probably to 10. However, I would not expect double-digit premium as an average for the second quarter, because still April was a kind of quotations. There were quotations from February, let's say, and then May and June will be impacted by this higher premium. On average, if you estimate single digit closer to 10 would be base case rough assumption.
Thank you.
Thank you. Piotr, you had a follow-up?
Yes. I put myself into line given there's nobody else in the queue.
Yeah.
Three follow-ups, if I may. How do you think about the margins on the Henry Hub, T TF, and your LNG portfolio for next year, and to what extent you are able to hedge these margins? Do you see a material upside into your numbers because of this factor, and what's your ability to lock it in? Second, can you say, you were talking on previous calls about the possible strategy update and directionally how you think about the CapEx figures going forward. We are at the mid PLN 30s billion level annually. I just wanted to understand how you think about this potential to spend CapEx and your investment opportunities till the end of the decade. This would be my two follow-ups.
Okay. Thank you. As regards Henry Hub and TTF, this is a key item in our hedging policy. I said that we have this net position, which is 1.8 billion liability. Majority of that is basically hedging of U.S. exposure. According to our hedging policy, of course, we start from 100% hedged position in the nearest term. Over the course of time, of course, 100% drops. 2027, I can say we have a lot of hedges implemented. I would not see in 2027 very significant positive impact of the situation. We continue to hedge. Definitely I would look into the hedges policy as a flattening of the volatility. We are utilizing those curves which are currently in place to hedge longer terms if possible. I would look into our hedging policy as a kind of ongoing structural approach.
We don't want to speculate here to take any opportunity and to generate extra result. This is a consistent hedging policy. Once the prices are not going in the favorable direction, we will have negative impact and vice versa, of course. If we manage to hedge with current curves our position for the next years to come, you will see positive impact, despite the fact that the margin TTF, Henry Hub is going to a kind of shorten. That's it. As regards strategy update, so of course, we wait for the right momentum. Probably we all agree that this is definitely so volatile market that going with an update of strategy is definitely too early. We need to have comfort as regards macro assumptions for the next few years. At this stage, we target fourth quarter probably this year.
However, we will see how the market develops. I would not expect any significant changes in the strategy. This is just a question of focus and priorities. Maybe slight changes in the priorities you may expect. I am not in a position, again, sorry, Piotr, for that, I'm just answering all your question that I cannot answer because really, from one perspective, this is confidential, but from the second perspective, we are not ready at this stage to say definitely what kind of levels we will put in our strategy. However, I can just refer what I always repeat. We should be cash generators, cash-generated company, we'll look into our cash flow from operations and then we should split this cash flow from operations among CapEx and among dividend. We will try to find the right balance among two factors.
Sure. If I may, just slightly, because you say there's a slight amendment to your direction of travel, which I kind of disagree it's a slight amendment. The company was promising PLN 80 billion in M&A. The company was promising PLN 80 billion or tens of billions in renewables. We are a year and a half into the strategy. None of it has materialized. The CapEx was meant to be in the range of PLN 50 billion, is in the range of PLN 30 billion. I wouldn't call it a slight amendment. What I'm trying to get to understand is what you present is a materially different vision of what was presented in the strategy.
That's why I ask these questions, in a sense, trying to get whether you should look at a cash flow positive company paying dividend, your vision, versus the one, if we take the document from January last year, it's a very different vision of the company. Would you agree with this assessment?
Not exactly, because in the strategy, M&A was put as a kind of option. What I'm saying, I'm referring to the base CapEx, which is a kind of organic CapEx. As regards M&A, that's always the same story from our side. If there is any opportunity from the M&A perspective, meaning, for example, upstream, of course, we will look at that, and if our cash position allows us to go into M&A, of course, we will look at that. From organic CapEx, basically, if you look at our ongoing projects, majority of this project, for the next three years, our CapEx is basically set. If you look into our offshore projects, which are the biggest ones, if you look into New Chemical, then we have GAP. Then we have all other projects in refining, meaning HBO, bottom of the barrel, like Kętrzyn or Jedlicze.
A lot of projects in the pipeline, CCGT in energy sector, as you know. If you count all of that's my statement, that from that perspective, if you look segment by segment, I don't see any significant changes in our strategy. Of course, as regards the amounts and priorities, they may a little bit change. From the organic point of view, and definitely what I usually say, there is this maintenance CapEx that should be optimized. My view is that we should focus on CapEx from the rationalization point of view. From that perspective, you may expect a kind of drop as compared to our strategic numbers. However, please bear in mind this M&A and compare apple with apple.
Okay. Thank you very much.
Yes. Thank you.
It does seem that we, oh, Ricardo made it before I could. Ricardo, please. Morgan Stanley. We can't hear you.
Hello. Good morning. Can you hear me?
Yeah.
Perfect. I'll just like to have a follow-up on the last discussion about M&A. We look at the expected production curve for upstream from the strategy update, there was this optional component or some flexibility embedded through to M&A, in North Sea, in North America as well. Would you mind just commenting on what you're seeing in potential opportunities in there? It's something that compared with the original expectations from the strategy update, is more of a matter of pricing or not really finding the sort of assets that you were looking for at the time. How should we really think about the upstream production curve in the coming years? Thank you.
Thank you so much. As we know, our presence in upstream is in Poland, Norway and Canada at the moment. Partially in Pakistan, a little bit Libya as well, but those are minor stakes. There is definitely depletion of our deposits, so that's why we allocate roughly up to PLN 8 billion, PLN 7 billion-PLN 8 billion yearly, just for maintenance, for new discoveries. To keep the production going and with slight increases. Of course, in our strategic targets, you saw a kind of increase in our production. However, this is not so easy to do with organic CapEx, so that's why we are talking about M&A, and usually it's good to have two, three legs. One is Norway, one is, of course, North America. We are observing this market.
Of course, the current macro environment, leads us to the question, at what kind of crude oil price or gas price valuation should take place? We are not that eager to do this immediately. I'm just saying that that's the optionality and this is something we are looking at. Definitely through organic CapEx, looking into our deposits, it's difficult to expect that the production will increase significantly. However, we try to at least not to have decrease in this production. I hope that helps a little bit.
Yeah, that is very clear. Thank you.
Thank you.
Right. It does seem that we managed to answer your questions, at least in some way, and we'll revert back to you with the details for those questions we didn't cover within an hour detail. By saying that, I would be going to conclude the meeting if there's no final questions. Thank you very much for participation. Thank you very much for your time and, yeah, we'll be seeing on the road, on the meetings and, if not earlier, we'll see you on the Q2 results view in beginning of August. Thank you very much for your attention and participation today.
Thank you so much. All the best. Thank you.