NOVATEK announces consolidated IFRS results for the first quarter 2009

15 May 2009

Moscow, 15 May 2009. OAO NOVATEK today released its consolidated interim condensed financial information for the three months ended 31 March 2009 prepared in accordance with International Financial Reporting Standards (“IFRS”).

IFRS Financial and Operational Highlights

(in millions of Russian roubles)

1Q 2009 1Q 2008
Revenues
Oil and gas sales 16,316 20,167
Sales of polymer and insulation tape 397 551
Other revenues 268 158
Total revenues 16,981 20,876
Total operating expenses (11,379) (11,023)
Other operating income (loss) 57 16
Profit from operations 5,659 9,869
Finance income (expense) (2,908) 139
Profit before income tax 2,735 9,986
Profit (loss) 2,139 7,499
Profit (loss) attributable toshareholders of
OAO NOVATEK
2,134 7,503
(in Russian roubles) 0.70 2.47

Total revenues decreased by 18.7% year-on-year to RR 16,981 million for the three months ended 31 March 2009 from RR 20,876 million in the corresponding period of 2008. The decrease in total revenues was largely attributable to the lower liquid hydrocarbon pricing environment in both the international and domestic markets as well as a decrease in our liquids sales volumes primarily due to higher inventory volumes in transit and storage. Oil and gas revenues were negatively impacted by benchmark crude oil price declines of more than 50% during the 2009 period compared to the same period in 2008. During the period, NOVATEK optimized natural gas and gas condensate production as well as its marketing channels to mitigate the fall in total revenues.

“The pricing environment for liquid hydrocarbons remained difficult throughout the first quarter 2009 and negatively impacted our liquids sales, despite recent signs of improvement. Nevertheless, we have demonstrated the flexibility of our operations by producing solid results in a turbulent market environment reaffirming the viability and stability of our core operations” according to the Chairman of the Management Board, Leonid Viktorovich Mikhelson.

Profit attributable to NOVATEK shareholders fell by 71.4% to RR 2,134 million, or RR 0.70 per share, as compared to the corresponding period of 2008 primarily due to lower revenues and a significant non-cash foreign exchange loss in the 2009 period.

Selected Operating Highlights

Production and Purchased Volumes 1Q2009 1Q2008
(million cubic meters) 8,173 7,578
(million cubic meters) 290 547
Total natural gas production and purchases 8,463 8,125
Liquids production (thousand tons) 709 631
Liquids purchases (thousand tons) - 32
Total liquids production and purchases 709 663

Sales Volumes 1Q2009 1Q2008
Natural gas (million cubic meters) 8,563 8,391
Stable gas condensate (thousand tons) 393 441
Liquefied petroleum gas (thousand tons) 156 158
Crude oil (thousand tons) 56 77
Oil products (thousand tons) 3 26

Sales volumes of natural gas increased in the first quarter 2009 due to continued strong organic production growth at the Yurkharovskoye field resulting from the launch of the field’s phase two expansion in September 2008.

At 31 March 2009, we had 313 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 172 thousand tons as of 31 March 2008.

Selected Items from the

Statement of Financial Position

(in millions of Russian roubles)

31 March 2009 31 December 2008
ASSETS
Non-current assets 116,179 113,578
Property, plant and equipment, net 111,336 108,714
Total current assets 28,146 25,428
Total assets 145,245 139,907
LIABILITIES AND EQUITY
Non-current liabilities 28,375 28,763
Long-term debt 19,251 19,935
Current liabilities 17,679 14,169
Total liabilities 46,385 43,267
98,284 96,069
Non-controlling interest 576 571
Total equity 98,860 96,640
Total liabilities and equity 145,245 139,907

The full set of reviewed 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 ).

***

Certain statements in this press release are not historical facts and are “forward looking” within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934 (hereinafter, the Exchange Act). Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and other information that is not historical information. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.


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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