NOVATEK announces consolidated IFRS results for the year ended 31 December 2016

Mark Gyetvay, Deputy Chairman of the Management Board
Alexander Nazarov, Head of IR
+7 (495) 730-6013
ir@novatek.ru

 

Maria Dokuchaeva, Press-secretary
+7 (495) 721-2207
press@novatek.ru

 

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21 February 2017

Moscow, 21 February 2017. PAO NOVATEK today released its audited consolidated financial statements for the year ended 31 December 2016 prepared in accordance with the International Financial Reporting Standards (“IFRS”). 

IFRS Financial Highlights
(in millions of Russian roubles)

 
FY 2016
FY 2015
Oil and gas sales
533,857
472,007
Other revenues
3,615
3,318
Total revenues
537,472
475,325
Operating expenses
(385,499)
(335,042)
Net gain on disposal of interests in joint ventures
73,072
989
Other operating income (loss), net
221
(542)
Profit from operations*
152,194
139,741
Normalized EBITDA of subsidiaries*
188,781
160,523
Normalized EBITDA including share in EBITDA of joint ventures*
242,407
214,189
Finance expense
(7,941)
(16,182)
Share of profit (loss) of joint ventures, net of income tax
90,839
(31,607)
Profit before income tax
308,164
92,941
Profit attributable to shareholders of PAO NOVATEK
257,795
74,396
Normalized profit**
attributable to shareholders of PAO NOVATEK
133,759
132,509
Normalized earnings per share**
(in Russian roubles)
44.31
43.87
* Before disposals of interests in joint ventures.
** Excluding the effect from the disposal of interests in joint ventures, as well as the effect of foreign exchange gains (losses).
 
For the twelve months ended 31 December 2016, total revenues increased by 13.1% year-on-year to RR 537.5 billion. We also recorded an increase of 13.2% in the Company’s Normalized EBITDA, including our respective share in the EBITDA of joint ventures, which totaled RR 242.4 billion. The growth in our revenues and EBITDA was largely driven by the increase in natural gas and liquids sales volumes as well as an increase in the proportion of liquids sold in our total sales mix.
 
Profit attributable to NOVATEK shareholders increased by more than three-fold to RR 257.8 billion (RR 85.41 per share), as compared to RR 74.4 billion (RR 24.63 per share) in 2015. The amount of profit and its dynamics were significantly impacted by the foreign exchange effect (including at the joint ventures level), as well as the effect of the disposals of interests in joint ventures.
 
Our free cash flow increased significantly to RR 139.4 billion, or by 69.4%,  as a result of operating cash flow growth by 30.8% and a decrease in cash used for capital expenditures by 32.0% as compared to 2015.
 
Production and Purchased Volumes
 
FY 2016
FY 2015
Total production, million barrels of oil equivalent
537.0
521.6
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
66,103
67,905
Natural gas production by subsidiaries, mmcm
46,235
49,172
Natural gas purchases from joint ventures, mmcm
10,058
7,152
Other purchases of natural gas, mmcm
8,108
6,626
Total natural gas production by subsidiaries and purchases, mmcm
64,401
62,950
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)
12,441
9,094
Liquids production by subsidiaries, mt
7,194
4,198
Liquids purchases from joint ventures, mt
9,809
9,045
Other purchases of liquids, mt
124
94
Total liquids production by subsidiaries and purchases, mt
17,127
13,337

Total marketable production including the Company’s share in production of joint ventures aggregated at 537.0 million barrels of oil equivalent, representing a 3.0% increase as compared with 2015. The production growth was due to the successful launches of NOVATEK’s new producing capacities, including joint ventures, in 2015.

Hydrocarbon Sales Volumes

 
FY 2016
FY 2015
Natural gas, mmcm
64,709
62,465
   including sales to end-users, mmcm
59,646
58,054
Liquids, mt
16,850
12,888
   including:
 
 
   Gas condensate refined products
6,662
6,693
   Crude oil
4,650
1,090
   Stable gas condensate
2,812
2,786
   Liquefied petroleum gas
2,713
2,306
   Other oil products
13
13

In 2016, natural gas sales volumes increased to 64.7 billion cubic meters (bcm), or by 3.6%, as compared with 2015, due to restoring sales to one of our major customers who did not take full contracted volumes in 2015 due to technical reasons, as well as sales of additional natural gas volumes to our end-customers and wholesale traders.

Our liquid hydrocarbon sales volumes totaled 16.9 million tons, representing a significant increase of 30.7% as compared with 2015. The significant increase was due to the high growth in liquids production due to the successful launches of the Yarudeyskoye crude oil field in December 2015 and the Yaro-Yakhinskoye and the Termokarstovoye gas condensate fields in the first half 2015. As at 31 December 2016, 903 thousand tons of liquid hydrocarbons were in transit or storage and recognized as inventory. 

Selected Balance Sheet Items
(in millions of Russian roubles)
 
 
 
3December 2016
3December 2015
ASSETS
 
 
Non-current assets
831,074
751,552
Property, plant and equipment
331,795
331,712
Investments in joint ventures
259,650
154,725
Long-term loans and receivables
209,145
230,799
Total current assets
132,760
120,485
Assets held for sale
-
7,987
Total assets
963,834
880,024
LIABILITIES AND EQUITY
 
 
Non-current liabilities
197,323
282,178
Long-term debt
161,296
252,050
Current liabilities
108,791
169,5675
Total liabilities
306,114
451,853
Equity attributable to PAO NOVATEK shareholders
648,350
426,079
Non-controlling interest
9,370
2,092
Total equity
657,720
428,171
Total liabilities and equity
963,834
880,024

The full set of audited consolidated IFRS financial statements for the year ended 31 December 2016 and the related notes thereto as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations are available on the Company’s website (www.novatek.ru).


PAO NOVATEK is the largest independent natural gas producer 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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