SNGN Romgaz : Information Note on the 2023 Consolidated Income and Expenditure Budget of Romgaz Group

Societatea Naţională de Gaze Naturale Romgaz S.A. - Mediaş - România

NO. 2220/17.01.2023

ENDORSED,

CHAIRMAN of the BOARD OF DIRECTORS,

Dan Dragoș DRĂGAN

TO,

The GENERAL MEETING OF SHAREHOLDERS of S.N.G.N. ROMGAZ S.A. MEDIAS

Information Note on the 2023 CONSOLIDATED Income and Expenditure Budget

of Romgaz Group

The 2023 Consolidated Income and Expenditure Budget was prepared for Romgaz Group on the basis of individual budgets of SNGN Romgaz SA Medias (hereinafter referred to as the Company/Parent Company) and of the two subsidiaries: SNGN Romgaz SA - Filiala de Înmagazinare Gaze Naturale Depogaz Ploiești SRL (hereinafter referred to as - Depogaz/the Subsidiary) and Romgaz Black Sea Limited (hereinafter referred to as - Romgaz Black Sea Limited), adjusted for consolidation.

By ANRE Decision no. 151/22.01.2014, the title holder of Storage License no. 1942/22.01.2014 for operating the natural underground storage system changed, being transferred from SNGN Romgaz SA Mediaș to SNGN Romgaz SA - Filiala de

Înmagazinare Gaze Naturale Depogaz Ploiești SRL. As of April 1, 2018, the natural

gas storage activity has been carried out within Depogaz.

On August 1, 2022 the transaction to acquire all shares issued by ExxonMobil Exploration and Production Romania Limited ("EMEPRL") was completed.

Following this acquisition, Romgaz became sole shareholder of EMEPRL, currently Romgaz Black Sea Limited, holding 50% of the acquired rights and obligations under Petroleum Agreement for the deep water zone of XIX Neptun block in the Black Sea.

Therefore, as of August 1, 2022 SNGN Romgaz SA includes this subsidiary's Income and Expenditures Budget in the consolidated Income and Expenditures Budget.

1. Main Indicators of the Individual Income and Expenditures Budgets (for each entity).

The budgets approved for 2023 provided for the transfer of fixed assets to the Subsidiary as of January 01, 2024. Therefore, both Depogaz and the Parent Company prepared their own income and expenditure budget having in mind the

Capital social: 385.422.400 lei	S.N.G.N. Romgaz S.A.
551130, Piaţa C.I. Motaş, nr.4
CIF: RO 14056826
Mediaş, jud. Sibiu - România
Nr. Ord.reg.com/an : J32/392/2001	Telefon [phone]
RO	RNCB 0231 0195 2533 0001 - BCR Mediaş	Fax [phone]
E-mail: [e-mail]
RO12 BRDE 330S V024 6190 3300 - BRD Mediaş
www.romgaz.ro

termination as of January 1, 2024 of the lease of specific assets from the parent company.

In 2024, the effect of the asset transfer is reflected in the decrease of income in the parent company (from leases), while as for the subsidiary it is reflected in the decreased expenses with paid lease and increased expenses with depreciation. We mention that, the fixed assets used in the storage activity owned by Romgaz, for transfer to the Subsidiary, were recorded as current assets as assets held for disposal and as a result they are not depreciated in the individual budget of the parent company. In drawing up of the consolidated budget, this depreciation is taken into account because at Group level these assets are of a fixed assets nature.

As of August 1, 2022 Romgaz finances the operating activity and the investments of Romgaz Black Sea Limited. In this respect, Romgaz grants loans to Romgaz Black Sea Limited, with their reimbursement after production starts and income is recorded from gas sales. The interest rate for these loans is estimated to 10%/year in 2023 (ROBOR 12M+1.74%).

Please find below the indicators representing the income, expenses and profit included in the income and expenditure budget of the three entities:

Table 1

	Item		S P E C I F I C A T I O N		Romgaz		Depogaz		Romgaz Black Sea
		2023		2023			Limited
	No.		RON thousand
			proposal		proposal		2023 proposal
0	1	2		3		4
	1		TOTAL INCOME, including:		10 408 85			527 929			-
1.1.		Operating income	10 324 398		526 579	-
1.2.		Financial income	84 087		1 350	-
	2		TOTAL EXPENSES		7 826 527			469 690			91 064
2.1.		Operating expenses	7 603 029	469 690	50 969
	A		Expenses for goods and services	964 019	341 194	30 022
	B		Expenses for taxes, duties and similar	4 181 777	18 402	1 144
		payments
	C		Personnel-related expenses	1 066 619	93 086	9 155
	D		Other operating expenses	1 390 613	17 007	10 648
2.2.		Financial expenses	223 499	-	40 095
	3		GROSS PROFIT		2 581 958			58 239			- 91 064

1. Individual Budget Items to be consolidated into the Group's
   Consolidated Income and Expenditure Budget

Bearing in mind that S.N.G.N. Romgaz S.A. Medias is the sole shareholder of Depogaz and Romgaz Black Sea Limited, and that the securities of the parent

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company are traded on a regulated market, it is necessary to consolidate the income and expenditure budgets.

Consolidation at Group level has the role to inform about the indicators that do not include transactions (income/expenses) recorded between the parent company and the subsidiaries, such transactions affecting the indicator levels.

The separate budgets are cumulated for consolidation (income and expenses), while the intra-group transactions are excluded, namely the transactions between the parent company and the subsidiaries and the consolidation adjustments are added.

The following table shows the elements (income/expenses) excluded by consolidation from the group's income and expenditure budget:

Table 2

						Depogaz		Depogaz
						and		and
	RON thousand		Romgaz	Romgaz	Romgaz		Romgaz		Total	Total
		Income	Expenses	Black Sea		Black Sea		Income	Expenses
						Limited		Limited
						Income		Expenses
	Natural gas
	underground
	storage services			102 300	102 300					102 300	102 300
	Asset lease	103 483					103 483		103 483	103 483
	Natural gas
	delivered for
	technological
	consumption	83 524					83 524			83 524	83 524
	Transport
	services	4 000					4 000			4 000	4 000
	Other services
	(water, third-
	party expenses)	98					98			98	98
	Interest	39 846					39 846			39 846	39 846
	TOTAL	230 952	102 300	102 300		230 952		333 251	333 251
			Loans granted	Loans received by		For operating		For investments
	RON thousand		by Romgaz	Romgaz Black Sea		activity			financing
									financing
	Investments		937 144		937 144		61 068		876 077

The adjustments according to IFRS which are added to the consolidated budget consist in the annulment of dividends received from Depogaz and re-establishment of expenses with depreciation of fixed assets owned by Romgaz leased to Depogaz. In Romgaz accounting, these fixed assets represent current assets in the form of assets held for disposal and which, according to IFRS are not depreciated. From the Group's point of view, these assets represent fixed assets that generate

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depreciation. We mention that these adjustments affect gross result of Romgaz Group.

1. Consolidated Income and Expenditure Budget of S.N.G.N. Romgaz S.A. Medias Group

After excluding the transactions between the parent company and the subsidiaries, and adding the other consolidation adjustments, the main indicators in the Group`s consolidated income and expenditure budget are shown in the table below:

Table 3

				S P E C I F I C								Romgaz								Total 2023
	Item			Romgaz 2023		Depogaz		Black Sea		Consolidat		Adjustments		Consolidated
		A T I O N		Budget		2023 Budget		Limited				Income and
	No.						ions		acc. to IFRS
		RON thousand		Proposal		Proposal		2023 Budget				Expenditure
													Proposal								Budget
0		1		2		3		4		5(-)		6(+)		7=2+3+4-5+6
				TOTAL
	1			INCOME, out of			10 408 485			527 929			-			333 251			- 43 818			10 559 344
				which:
1.1.			Operating	10 324 398		526 579	-		293 406		-		10 557 571
		income
1.2.			Financial	84 087		1 350	-		39 846		- 43 818		1 773
		income
				TOTAL
	2			EXPENSES, out			7 826 527			469 690			91 064			333 251			97 920			8 151 949
				of which:
2.1.			Operating	7 603 029		469 690	50 969		293 406		97 920		7 928 202
		expenses
				Expenses for
	A		goods and	964 019		341 194	30 022		293 406		-		1 041 830
				services
				Expenses with
	B		taxes, duties	4 181 777		18 402	1 144		-		-		4 201 323
		and similar
				payments
				Personnel-
	C		related	1 066 619		93 086	9 155		-		-		1 168 860
				expenses
				Other
	D		operating	1 390 613		17 007	10 648		-		97 920		1 516 189
				expenses
2.2.			Financial	223 499					40 095		39 846		-		223 748
		expenses
	3=1-			GROSS PROFIT			2 581 958			58 239			- 91 064						- 141 738			2 407 395
	2
	4			INVESTMENTS			2 298 900			72 500			736 199			937 144			-			2 170 455

In the parent company's Individual Income and Expenditure Budget, the expenses related to planned investments amount to RON 2,298,900 thousand (including credit reimbursements), financed from own sources, credits for investments and the National Investment Program.

Depogaz Income and Expenditure Budget provides for 2023 investments in the amount of RON 72,500 thousand and the financing sources are as follows:

• from depreciation RON 13,808 thousand,
• from current profit RON 21,569 thousand,

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• from previous profit RON 37,123 thousand.

Romgaz Black Sea Limited Income and Expenditure Budget provides for 2023 investments in the amount of RON 736,199 thousand, and the investments financing sources are loans granted by the parent company.

The Group's consolidated income and expenditure budget shall be submitted for information to SNGN Romgaz SA Medias Ordinary General Meeting of Shareholders, simplified (only Annex 1 of 2023 Consolidated Income and Expenditure Budget).

Annexes:

Annex 1: Income and Expenditure Budget - consolidated for 2023;

The proposal for 2023 Consolidated Income and Expenditure Budget of S.N.G.N. Romgaz S.A. Medias Group was submitted to the attention of the Board of Directors during the meeting of January 16, 2023.

Taking into account the above mentioned, we hereby submit to the attention of the Ordinary General Meeting of Shareholders of S.N.G.N. Romgaz S.A. the 2023 Consolidated Income and Expenditure Budget of S.N.G.N. Romgaz S.A. Medias Group.

CHIEF EXECUTIVE OFFICER

Răzvan POPESCU

CHIEF FINANCIAL OFFICER

Gabriela TRÂNBIȚAȘ

ACCOUNTING DEPARTMENT DIRECTOR

Marius VEZA

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