Orlen Buys TriOil for $178 Million to Expand Oil Output

PKN Orlen SA, Poland’s largest refiner, agreed to buy Canadian oil and gas company TriOil Resources Ltd (TOL) for C$183.7 million ($178 million) in cash, its first foreign expansion into crude oil production.

State-controlled Orlen will take over 100 percent of the Calgary-based company for an enterprise value, which includes TriOil’s net debt, of C$240.1 million, the Plock, Poland-based company said in a regulatory statement today.

The purchase will give Orlen, which also runs refining and retail businesses in the Czech Republic and Lithuania, access to foreign oil deposits and make it less dependent on Russian supplies. The company, which is looking for oil and gas from shale deposits in Poland, plans to spend 15.1 billion zloty ($4.8 billion) on expanding its refining and retail businesses as well as oil extraction and power generation by 2017, it said in a strategy published last year.

“This is an interesting acquisition that should allow Orlen to gain some experience in the upstream business,” Flawiusz Pawluk, analyst at UniCredit SpA in Warsaw, said by phone. “TriOil operations aren’t that small and investments are financed with its own revenue,” which means PKN “won’t need to spend additional money on expanding the company.”

Orlen shares climbed as much as 2.1 percent, the biggest intraday gain in almost a week, and traded 1 percent higher at 43.53 zloty as of 9:48 a.m. in Warsaw, valuing the company at 18.6 billion zloty. TriOil rose 1 percent to C$3.06 on Sept. 13, valuing the company at C$195.8 million.

To contact the reporter on this story: Marta Waldoch in Warsaw at mwaldoch@bloomberg.net

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