NOVATEK announces consolidated IFRS results for third quarter and nine months 2015

28 October 2015

Moscow, 28 October 2015. OAO NOVATEK (“NOVATEK” or the “Company”) today released its consolidated interim condensed financial statements as of and for the three and nine months ended 30 September 2015 prepared in accordance with International Financial Reporting Standards (“IFRS”). 

IFRS Financial Highlights
(in millions of Russian roubles, except for per share amounts)
3Q 2015
3Q 2014
 
9M 2015
9M 2014
116,212
84,090
Oil and gas sales
341,010
260,504
1,155
643
Other revenues
2,343
1,275
117,367
84,733
Total revenues
343,353
261,779
(85,096)
(55,870)
Operating expenses
(238,533)
(165,415)
989
-
Net gain on disposal of interests in joint ventures
989
2,623
158
100
Other operating income (expense)
(199)
1,850
33,418
28,963
Profit from operations
105,610
100,837
37,115
34,129
Normalized* EBITDA of subsidiaries
120,117
109,991
52,574
38,757
Normalized* EBITDA including share in EBITDA of joint ventures
157,898
122,059
(6,174)
(6,019)
Finance expense
(11,290)
(9,531)
(34,713)
(11,777)
Share of loss of joint ventures, net of income tax
(17,435)
(9,731)
(7,469)
11,167
Profit (loss) before income tax
76,885
81,575
(13,405)
7,627
Normalized* profit (loss) attributableto OAO NOVATEK shareholders
59,590
62,633
31,904
24,258
Normalized* profit attributable to OAO NOVATEK shareholders, excluding FX effect
96,505
80,040
10.56
8.03
Normalized* basic and diluted earnings (loss) per share, excluding FX effect (in Russian roubles)
31.95
26.48
* Excluding the effect from disposal of interests in joint ventures.
 

In the third quarter and first nine months 2015, our total revenues increased by 38.5% and 31.2%, respectively, compared to the corresponding periods of 2014, which was mainly due to an increase in liquids sales volumes and prices for natural gas sales.

The Company’s Normalized EBITDA, inclusive of share in EBITDA of joint ventures, amounted to RR 52.6 billion in the third quarter 2015 and RR 157.9 billion in the first nine months 2015, representing an increase of 35.7% and 29.4%, respectively, as compared to the corresponding periods of 2014. Our Normalized EBITDA was positively impacted by the higher share of liquid product sold in our overall sales volumes mix.

In the first nine months 2015, Normalized Profit attributable to NOVATEK shareholders, totaled RR 59.6 billion (including a loss of RR 13.4 billion in the third quarter 2015) and decreased by 4.9% as compared to RR 62.6 billion in the first nine months 2014.

Our profit dynamics were negatively impacted by the devaluation of the Russian rouble against the US dollar and Euro, which resulted in non-cash foreign exchange losses due to revaluation of the foreign currency debt of NOVATEK and our joint ventures, mainly Yamal LNG. The revaluation does not negatively impact the profitability and financial performance of our business given the currency structure of NOVATEK and our joint ventures cash flows. Net of the foreign exchange effects, our Normalized Profit attributable to NOVATEK shareholders in the third quarter and first nine months 2015 increased by 31.5% and 20.6% respectively compared to the corresponding periods of 2014. 

 
Marketable Hydrocarbon Production and Purchased Volumes
3Q 2015
3Q 2014
 
9M 2015
9M 2014
17,061
15,196
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
50,102
45,858
11,868
12,901
including production by subsidiaries, mmcm
36,607
39,430
1,851
1,270
Natural gas purchases from joint ventures, mmcm
5,089
2,929
1,699
1,815
Other purchases of natural gas, mmcm
4,844
5,340
15,418
15,986
Total natural gas production by subsidiaries and purchases, mmcm
46,540
47,699
2,346
1,533
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)
6,535
4,275
969
1,065
including liquids production by subsidiaries, mt
3,021
3,244
2,555
879
Liquids purchases from joint ventures, mt
6,442
1,939
37
33
Other purchases of liquids, mt
58
46
3,561
1,977
Total liquids production by subsidiaries and purchases, mt
9,521
5,229
  
Hydrocarbon Sales Volumes
3Q 2015
3Q 2014
 
9M 2015
9M 2014
14,272
14,944
Natural gas, mmcm
44,747
48,244
13,435
14,107
including sales to end-customers
42,014
45,388
 
 
 
 
 
3,474
1,697
Liquids, mt
9,219
4,929
 
 
including:
 
 
1,613
1,025
Stable gas condensate products
5,038
3,077
975
67
Stable gas condensate
1,796
142
632
361
Liquefied petroleum gas
1,617
1,043
251
241
Crude oil
760
659
3
3
Other
8
8
 
In the first nine months 2015, our natural gas sales volumes totaled 44.7 billion cubic meters (“bcm”) (including 14.3 bcm in the third quarter 2015), which is 7.2% lower as compared to the same period of 2014 mainly due to warmer weather during the winter peak season. As at 30 September 2015, the total amount of natural gas recorded as inventory was 2.7 bcm.

In the nine months 2015, liquid hydrocarbon sales volumes totaled 9.22 million tons (including 3.47 million tons sold in the third quarter 2015), representing an 87.0% increase as compared to the corresponding period of 2014. Higher volumes of gas condensate purchased from our joint ventures due to production growth at the SeverEnergia joint venture fields and the successful launch of the Termokarstovoye field at the Terneftegas joint venture as well as the increase of crude oil production by subsidiaries positively impacted our liquids sales during the period. As at 30 September 2015, 0.83 million tons of liquid hydrocarbons were in transit or storage and recognized as inventory.

Selected Balance Sheet Items
(in millions of Russian roubles) 
  
    30 September 2015
31 December 2014
ASSETS
 
 
Non-current assets
665,729
572,548 
Property, plant and equipment
322,064
291,726 
Investments in joint ventures
163,549
166,231
Long-term loans and receivables
150,824
94,142
Total current assets
136,720
126,591
Total assets
802,449
699,139
LIABILITIES AND EQUITY
 
 
Non-current liabilities
223,367
230,807
Long-term debt
194,726
204,699
Current liabilities
166,366
81,208
Total liabilities
389,733
312,015
Equity attributable to
OAO NOVATEK shareholders
 
411,323
384,755
Non-controlling interest
1,393
2,369
Total equity
412,716
387,124
Total liabilities and equity
802,449
699,139
 
The full set of non-audited 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 producers in Russia, and in 2017, entered the global gas 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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