NOVATEK Announces Consolidated IFRS Results for the First Quarter 2018

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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25 April 2018

Moscow, 25 April 2018. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three months ended 31 March 2018 prepared in accordance with International Financial Reporting Standards (“IFRS”).  

IFRS Financial Highlights
(in millions of Russian roubles except as stated)
 
1Q 2018 
1Q 2017 
Oil and gas sales
178,485 
154,001 
Other revenues
918 
627 
Total revenues
179,403 
154,628 
Operating expenses
(131,037)
(109,364)
Net gain on disposal of interests in joint ventures
1,645 
Other operating income (loss)
102 
274 
Profit from operations*
48,468 
45,538 
Normalized EBITDA of subsidiaries*
56,421 
53,815 
Normalized EBITDA including share in
EBITDA of joint ventures*
76,306 
68,180 
Finance income (expense)
5,402 
(8,602)
Share of profit (loss) of joint ventures, net of income tax
1,163 
43,626 
Profit before income tax
56,678 
80,562 
Profit attributable to
shareholders of PAO NOVATEK
43,121 
71,018 
Normalized profit attributable to
shareholders of PAO NOVATEK **
46,910 
44,345 
Normalized basic and diluted earnings
per share** (in Russian roubles)
15.56 
14.70 
* 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).
 

In the first quarter of 2018, our total revenues amounted to RR 179.4 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 76.3 billion, representing year-on-year increases of 16.0% and 11.9%, respectively. The increases in our total revenues and Normalized EBITDA were largely due to production launch at the first LNG train at Yamal LNG at the end of 2017 and an increase in average realized liquids and natural gas prices.

The Group’s profits in both reporting periods were significantly impacted by the recognition of substantial non-cash foreign exchange effects on foreign currency denominated loans of the Group and its joint ventures. As a result, profit attributable to shareholders of PAO NOVATEK decreased to RR 43.1 billion (RR 14.30 per share), or by 39.3%, as compared to the corresponding period in 2017. Excluding the effect of foreign exchange differences, as well as the one-time effect from the disposal of interests in joint ventures, Normalized profit attributable to shareholders of PAO NOVATEK increased to RR 46.9 billion (RR 15.56 per share), or by 5.8%, as compared to the corresponding period in 2017. 

Hydrocarbon Production and Purchased Volumes 
 
1Q 2018 
1Q 2017 
Total hydrocarbon production,
million barrels of oil equivalent (million boe)
132.5 
130.5 
Total production (million boe per day)
1.47 
1.45 
Natural gas production including proportionate share in
the production of joint ventures, million cubic meters (mmcm)
16,508 
16,150 
Natural gas production by subsidiaries
10,363 
11,259 
Natural gas purchases from joint ventures
7,587 
5,301 
Other purchases of natural gas
1,729 
1,860 
Total natural gas production by subsidiaries
and purchases (mmcm)
19,679 
18,420 
Liquids production including proportionate share in
the production of joint ventures, thousand tons (mt)
2,936 
2,967 
Liquids production by subsidiaries
1,628 
1,713 
Liquids purchases from joint ventures
2,300 
2,343 
Other purchases of liquids
44 
37 
Total liquids production by subsidiaries and purchases (mt)
3,972 
4,093 
  
Hydrocarbon Sales Volumes
 
1Q 2018 
1Q 2017 
Natural gas (mmcm)
20,263 
18,752 
including:
 
 
Sales in the Russian Federation
19,305 
18,752 
Sales on international markets
958 
Liquids (mt)
3,777 
4,113 
including:
 
 
Stable gas condensate refined products
1,566 
1,837 
Crude oil
1,123 
1,072 
Liquefied petroleum gas
649 
677 
Stable gas condensate
436 
524 
Other oil products
 

Our operational results for the first quarter of 2018 were significantly impacted by the production launch of the first LNG train at Yamal LNG at the end of 2017, as well as the acquisitions of new producing fields at the end of 2017 and in the first quarter of 2018 (the Beregovoye, the West-Yaroyakhinskoye and the Syskonsyninskoye fields). As a result, our total natural gas production increased by 2.2%, and our total liquids production declined marginally by 1.0%.

Our natural gas sales volumes totaled 20.3 billion cubic meters (bcm), representing an 8.1% increase as compared to the corresponding period in 2017, due to the commencement of sales of LNG purchased from our joint venture Yamal LNG to international markets from December 2017 and an increase in volumes sold in the Russian Federation. As at the end of the first quarter of 2018, our cumulative natural gas inventory balances mainly in the Underground Gas Storage Facilities, the Gas Transmission System and own pipeline infrastructure totaled 79 mmcm and decreased by 954 mmcm during the quarter as compared to a decrease by 704 mmcm in the corresponding period in 2017.

Our liquid hydrocarbon sales volumes aggregated 3.8 million tons, representing an 8.2% decrease as compared to the corresponding period in 2017. The decrease in our liquids sales volumes was mainly impacted by an increase in liquids inventories by 140 mt in the first quarter of 2018 compared to a decrease by 90 mt in the first quarter of 2017. As at 31 March 2018, we recorded 1,102 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 813 mt at 31 March 2017. Our liquid hydrocarbon inventory balances tend to fluctuate period-on-period and are usually realized in the following reporting period.

Selected Items of Consolidated Statement of Financial Position
(in millions of Russian roubles)
 
31 March 2018
31 December 2017
ASSETS
 
 
Non-current assets
944,456
890,726
Property, plant and equipment
402,713
360,051
Investments in joint ventures
289,494
285,326
Long-term loans and receivables
217,179
211,901
Current assets
143,552
153,436
Total assets
1,088,008
1,044,162
LIABILITIES AND EQUITY
 
 
Non-current liabilities
193,657
184,545
Long-term debt
142,018
141,448
Current liabilities
76,704
83,958
Total liabilities
270,361
268,503
Equity attributable to
PAO NOVATEK shareholders
 
800,919
757,839
Non-controlling interest
16,728
17,820
Total equity
817,647
775,659
Total liabilities and equity
1,088,008
1,044,162

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 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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