NOVATEK announces consolidated IFRS results for first quarter 2015

28 April 2015

Moscow, 28 April 2015. OAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three months ended 31 March 2015 prepared in accordance with International Financial Reporting Standards (“IFRS”).  

IFRS Financial Highlights
(in millions of Russian roubles) 
 
1Q 2015
1Q 2014
Oil and gas sales
113,224
88,533
Other revenues
518
143
Total revenues
113,742
88,676
Operating expenses
(73,896)
(53,875)
Net gain on disposal of interests in joint ventures
-
2,623
Other operating income (loss)
(199)
(41)
Profit from operations
39,647
37,383
Normalized EBITDA of subsidiaries*
45,034
38,967
Normalized EBITDA including share in EBITDA of joint ventures*
55,162
42,979
Finance expense
(7,246)
(4,320)
Share of profit (loss) of joint ventures, net of income tax
4,274
(1,722)
Profit before income tax
36,675
31,341
Profit attributable
to OAO NOVATEK shareholders
31,075
25,155
Basic and diluted earnings per share(in Russian roubles)
10.29
8.31
Normalized basic and diluted earnings per share* (in Russian roubles)
10.29
7.62
* Excluding the effect from disposal of interests in joint ventures.
 
In the first quarter 2015, our total revenues increased by 28.3% to RR 113.7 billion compared to RR 88.7 billion in the corresponding period of 2014. The growth was mainly due to an increase in liquids sales volumes and prices in ruble terms. Average prices of liquid hydrocarbons were positively impacted by the substantial increase in sales volumes of high value-added petroleum products from the Ust-Luga Complex. 

The share of export revenues in our gross revenues from hydrocarbon sales (including export duties, but excluding VAT) increased from 37.5% in the first quarter 2014 to 50.3% in the first quarter 2015, while the share of liquid hydrocarbons in our gross revenues from hydrocarbon sales grew from 42.3% to 57.4%.

The Company’s Normalized EBITDA, including our respective share in the EBITDA of joint ventures, amounted to RR 55.2 billion, representing a 28.3% increase compared to EBITDA for the first quarter 2014 adjusted for the effect from disposal of interest in Artic Russia B.V. Our share in EBITDA of joint ventures increased by 2.5 times year-on-year to RR 10.1 billion as compared to RR 4.0 billion in the first quarter 2014. Our Normalized EBITDA was positively impacted by higher share of liquids in our overall sales volumes mix.

In the first quarter 2015, Normalized Profit attributable to NOVATEK shareholders increased to RR 31.1 billion, or RR 10.29 per share, which is 34.8% higher than Normalized Profit for the first quarter 2014 adjusted for the effect from disposal of interest in Artic Russia B.V. Our profit dynamics was negatively impacted by non-cash foreign exchange losses due to depreciation of the Russian ruble against the US dollar of 3.9% and appreciation of the Russian ruble against the Euro of 7.3% during the reporting period. Net of these non-cash foreign exchange losses our Normalized Profit increased by 52.2% year-on-year.

In the first quarter 2015, our free cash flow generation increased to RR 25.2 billion, or by 83.4% as compared to the corresponding period of 2014.

Production and Purchased Volumes
 
1Q 2015
1Q 2014
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
16,151
15,423
   including production by subsidiaries, mmcm
12,461
13,398
Natural gas purchases from joint ventures, mmcm
1,623
284
Other purchases of natural gas, mmcm
1,549
1,677
Total natural gas production by subsidiaries and purchases, mmcm
15,633
15,359
 
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)
1,991
1,362
   including production by subsidiaries, mt
1,056
1,094
Liquids purchases from joint ventures, mt
1,703
496
Other purchases of liquids, mt
4
7
Total liquids production by subsidiaries and purchases, mt
2,763
1,597
  
Sales Volumes
 
1Q 2015
1Q 2014
Natural gas, mmcm
15,977
17,772
   including sales to end-users
15,077
16,677
Liquids, mt
2,834
1,545
   Including:
 
 
   Stable gas condensate products
1,837
965
   Liquefied petroleum gas
448
351
   Stable gas condensate
276
32
   Crude oil
271
195
   Other petroleum products
2
2
 
In the first quarter 2015, our natural gas sales volumes totalled 16.0 billion cubic meters (bcm), representing a 10.1% decrease as compared with the corresponding period in 2014. The decrease was mainly due to colder weather in the first quarter 2014 relative to the first quarter 2015 resulting in much higher withdrawals of natural gas from the underground storages in the first quarter 2014.

As at 31 March 2015, the total amount of natural gas recorded as inventory aggregated 654 mmcm as compared to 1,049 mmcm at the end of 2014. We sold 395 mmcm of natural gas from inventories in the first quarter 2015 as compared to 2,459 mmcm sold in the first quarter 2014.

Liquid hydrocarbon sales volumes aggregated 2,834 thousand tons in the first quarter 2015 representing an increase of 83.4% as compared with the first quarter 2014. Sales volumes were positively impacted by higher volumes of gas condensate purchased from our joint ventures due to production growth at the SeverEnergia fields, as well as by an increase in crude oil production by our subsidiaries. Sales volumes of high value-added petroleum products increased by 90.4% to 1,837 mt compared to 965 mt in the corresponding period of 2014, while their share in the overall liquids sales volume mix increased to 64.8%.

As at 31 March 2015, 591 thousand tons of liquid hydrocarbons were in transit or storage and recognized as inventory compared to 739 thousand tons at the end of 2014.

Selected Balance Sheet Items
(in millions of Russian roubles
 
 
31 March 2015
31 December 2014
ASSETS
 
 
Non-current assets
618,577
572,548
Property, plant and equipment
301,647
291,726
Investments in joint ventures
177,292
166,231
Total current assets
135,932
126,591
Total assets
754,509
699,139
LIABILITIES AND EQUITY
 
 
Non-current liabilities
195,726
230,807
Long-term debt
170,509
204,699
Current liabilities
136,508
81,208
Total liabilities
332,234
312,015
Equity attributable to
OAO NOVATEK shareholders
 
420,236
384,755
Non-controlling interest
2,039
2,369
Total equity
422,275
387,124
Total liabilities and equity
754,509
699,139

The full set of consolidated interim condensed IFRS financial statements, 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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