NOVATEK announces first quarter 2008 IFRS results

19 May 2008

Moscow, 19 May 2008. OAO NOVATEK today released its consolidated interim condensed financial information for the three months ending 31 March 2008 prepared in accordance with International Financial Reporting Standards («IFRS»).

IFRS Financial and Operational Highlights

in millions of Russian roubles
1Q 2008
1Q 2007
Revenues
 
 
Oil and gas sales
20,167
14,885
Sales of polymer and insulation tape
551
309
Other
158
65
Total revenues
20,876
15,259
Other income (loss)
16
16
Total revenues and other income
20,892
15,275
Total operating expenses
(11,023)
(9,579)
 
 
 
Profit from operations
9,869
5,696
Finance income (expense)
139
23
 
 
 
Profit before income tax
9,986
5,719
Profit for period
7,499
4,342
 
 
 
Profit (loss) attributable to OAO NOVATEK shareholders
7,503
4,347
Basic and diluted earnings per share
(in Russian roubles)
2.47
1.43

In the three months ended 31 March 2008, total revenues and other income grew by 36.8% to RR 20,892 million from RR 15,275 million in the corresponding period of 2007, reflecting the general strength and stability of our core business operations. The increase in total revenues from our primary business operations was attributable to the favorable pricing environment for both domestic and international hydrocarbon sales.

Profit attributable to NOVATEK shareholders increased by 72.6% to RR 7,503 million, or RR 2.47 per share, in the three months ended 31 March 2008 as compared to RR 4,347 million, or RR 1.43 per share, in the corresponding period in 2007.

Selected Operating Highlights

Production and Purchase Volumes
1Q 2008
1Q 2007
Natural gas production (million cubic meters)
7,578
7,548
Natural gas purchases (million cubic meters)
547
716
Total natural gas production and purchases
8,125
8,264
 
 
 
Liquids production (thousand tons)
631
586
Liquids purchases (thousand tons)
32
16
Total liquids production and purchases
663
602
 
 
 
Sales Volumes
1Q 2008
1Q 2007
Natural gas (millions cubic meters)
8,391
9,119
Stable gas condensate
(thousand tons)
441
385
Liquefied petroleum gas
(thousand tons)
158
123
Crude oil (thousand tons)
77
68
Oil products (thousand tons)
26
18

Sales volumes of natural gas decreased by 728 million cubic meters, or by 8.0%, from 9,119 million cubic meters in the three months ended 31 March 2007 to 8,391 million cubic meters in the corresponding period in 2008. The main cause for the sales volumes reduction was the decrease of volumes withdrawn from underground storage owned and operated by OAO Gazprom. In the three months ended 31 March 2008, our withdrawal from the underground storage facilities totaled 39 million cubic meters as compared to 893 million cubic meters in the corresponding period in 2007. Due to the unseasonably warm winter in 2007 we had a reduction in the amount of natural gas injected into the underground storage facilities in the summer season.

Net liquid sales volumes increased by 18.2% from 594 thousand tons in 1Q 2007 to 702 thousand tons in 1Q 2008.

At 31 March 2008, we had 172 thousand tons of stable gas condensate in transit or storage and recognized as inventory until such time as it is delivered to the port of destination as compared to 224 thousand tons as of 31 December 2007. At 31 March 2007, our inventory balance of stable gas condensate was 192 thousand tons compared to 190 thousand tons as of 1 January 2007.

Selected Balance Sheet Items

(in millions of Russian roubles)
 
31 March 2008
31 December 2007
ASSETS
 
 
Non-current assets
92,822
86,937
Property, plant and equipment, net
88,174
82,669
Total current assets
18,524
17,038
Total assets
111,346
103,975
LIABILITIES AND EQUITY
 
 
Non-current liabilities
10,170
10,088
Long-term debt
2
42
Current liabilities
11,821
12,075
Total liabilities
21,991
22,163
Equity attributable to
OAO NOVATEK shareholders
 
88,882
81,335
Minority interest
473
477
Total equity
89,355
81,812
Total liabilities and equity
111,346
103,975

The full set of consolidated interim condensed IFRS financial information, the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations are available on the Company’s web site (www.novatek.ru).


PAO NOVATEK is the largest independent natural gas producer in Russia, and in 2017, entered the global LNG market by successfully launching the Yamal LNG project. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. The Company’s upstream activities are concentrated mainly in the prolific Yamal-Nenets Autonomous Region, which is the world’s largest natural gas producing area and accounts for approximately 80% of Russia’s natural gas production and approximately 15% of the world’s gas production. NOVATEK is a public joint stock company established under the laws of the Russian Federation. The Company’s shares are listed in Russia on Moscow Exchange (MOEX) and the London Stock Exchange (LSE) under the ticker symbol “NVTK”.

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