NOVATEK Announces Consolidated IFRS Results for the Year Ended 31 December 2017

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

 

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

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21 February 2018

Moscow, 21 February 2018. PAO NOVATEK today released its audited consolidated financial statements for the year ended 31 December 2017 prepared in accordance with International Financial Reporting Standards (“IFRS”). 
 
IFRS Financial Highlights
(in millions of Russian roubles except as stated)
 
FY 2017 
FY 2016 
Oil and gas sales
579,819 
533,857 
Other revenues
3,367 
3,615 
Total revenues
583,186 
537,472 
Operating expenses
(419,859)
(385,499)
Net gain on disposal of interests in joint ventures
73,072 
Other operating income (loss)
424 
221 
Profit from operations*
163,751 
152,194 
Normalized EBITDA of subsidiaries*
198,335 
188,781 
Normalized EBITDA including share in
EBITDA of joint ventures*
256,464 
242,407 
Finance income (expense)
14,658 
(7,941)
Share of profit (loss) of joint ventures, net of income tax
22,430 
90,839 
Profit before income tax
200,839 
308,164 
Profit attributable to
shareholders of PAO NOVATEK
156,387 
257,795 
Normalized profit attributable to
shareholders of PAO NOVATEK **
156,166 
133,759 
Normalized basic and diluted earnings
per share** (in Russian roubles)
51.78 
44.31 
* Excluding the effect from disposal of interests in joint ventures.
** Excluding the effects from the disposal of interests in joint ventures, as well as foreign exchange gains (losses).
 

For the twelve months ended 31 December 2017, our total revenues amounted to RR 583.2 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 256.5 billion, representing year-on-year increases of 8.5% and 5.8%, respectively. The increases in total revenues and Normalized EBITDA were largely due to an increase in average realized liquids and natural gas prices. In addition, in December 2017, after the commencement of LNG production at the first train of our Yamal LNG project, NOVATEK sold its first cargo of LNG to international markets.

Profit attributable to shareholders of PAO NOVATEK decreased to RR 156.4 billion (RR 51.85 per share), or by 39.3%, as compared to 2016. In 2016, our profit was significantly impacted by the sale of a 9.9% equity stake in Yamal LNG and by the foreign exchange differences (including at the joint ventures level). Excluding these effects, Normalized profit attributable to shareholders of PAO NOVATEK increased to RR 156.2 billion (RR 51.78 per share), or by 16.8%, as compared to 2016.

 
Hydrocarbon Production and Purchased Volumes 
 
FY 2017 
FY 2016 
Total hydrocarbon production,
million barrels of oil equivalent (million boe)
513.3 
547.0 
Total production (million boe per day)
1.41 
1.49 
Natural gas production including proportionate share in
the production of joint ventures, million cubic meters (mmcm)
63,399 
67,647 
Natural gas production by subsidiaries
43,113 
47,510 
Natural gas purchases from joint ventures
15,297 
10,058 
Other purchases of natural gas
8,300 
8,108 
Total natural gas production by subsidiaries
and purchases (mmcm)
66,710 
65,676 
Liquids production including proportionate share in
the production of joint ventures, thousand tons (mt)
11,774 
12,441 
Liquids production by subsidiaries
6,759 
7,194 
Liquids purchases from joint ventures
9,315 
9,809 
Other purchases of liquids
173 
124 
Total liquids production by subsidiaries and purchases (mt)
16,247 
17,127 
 
Hydrocarbon Sales Volumes
 
FY 2017 
FY 2016 
Natural gas (mmcm)
65,004 
64,709 
including:
 
 
Sales in the Russian Federation
64,898 
64,709 
Sales on international markets
106 
Liquids (mt)
15,939 
16,850 
including:
 
 
Gas condensate refined products
6,743 
6,662 
Crude oil
4,616 
4,650 
Liquefied petroleum gas
2,648 
2,713 
Stable gas condensate
1,918 
2,812 
Other oil products
14 
13 
 

In 2017, natural gas sales volumes amounted to 65.0 billion cubic meters (bcm), representing a 0.5% increase as compared to 2016, due to a slight increase in volumes sold in the Russian Federation, as well as the commencement of sales of LNG purchased from our joint venture Yamal LNG to international markets from December 2017. As at 31 December 2017, our cumulative natural gas inventory balances in the Underground Gas Storage Facilities, the Gas Transmission System and own pipeline infrastructure totaled 1.0 bcm as compared to 0.8 bcm at the end of 2016.

In 2017, our liquid hydrocarbons sales volumes amounted to 15.9 million tons, representing a 5.4% decrease in volumes sold as compared to 2016. The decrease was due to a natural decline in gas condensate production volumes at mature fields of our subsidiaries and joint ventures. As at 31 December 2017, we recorded 962 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 903 mt at 31 December 2016.

In 2017, we significantly increased our resource base in the main region of our activities, the YNAO and adjacent areas, including the purchase in the fourth quarter of 2017 of two producing fields (the West-Yaroyakhinskoye and the Syskonsyninskoye) contributing to our production maintenance program.

Selected Items of Consolidated Statement of Financial Position
(in millions of Russian roubles)
 
31 December 2017
31 December 2016
ASSETS
 
 
Non-current assets
890,726
831,074
Property, plant and equipment
360,051
331,795
Investments in joint ventures
285,326
259,650
Long-term loans and receivables
211,901
209,145
Current assets
153,436
132,760
Total assets
1,044,162
963,834
LIABILITIES AND EQUITY
 
 
Non-current liabilities
184,545
197,323
Long-term debt
141,448
161,296
Current liabilities
83,958
108,791
Total liabilities
268,503
306,114
Equity attributable to
PAO NOVATEK shareholders
 
757,839
648,350
Non-controlling interest
17,820
9,370
Total equity
775,659
657,720
Total liabilities and equity
1,044,162
963,834
 

The full set of audited consolidated IFRS financial statements for the year ended 31 December 2017, 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 one of the largest independent natural gas producers in Russia. 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 16% 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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