NOVATEK Announces Consolidated IFRS Results for the Year Ended 31 December 2018

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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20 February 2019

Moscow, 20 February 2019. PAO NOVATEK today released its audited consolidated financial statements for the year ended 31 December 2018 prepared in accordance with International Financial Reporting Standards (“IFRS”). 

IFRS Financial Highlights
(in millions of Russian roubles except as stated)
 
FY 2018 
FY 2017 
Oil and gas sales
825,761 
579,819 
Other revenues
5,997 
3,367 
Total revenues
831,758 
583,186 
Operating expenses
(603,912)
(419,859)
Net gain on disposal of interests in joint ventures
1,645 
Other operating income (loss)
(2,307)
424 
Normalized profit from operations*
225,539 
163,751 
Normalized EBITDA of subsidiaries*
259,370 
198,335 
Normalized EBITDA including share in EBITDA of joint ventures*
415,296 
256,464 
Finance income (expense)
38,608 
14,658 
Share of profit (loss) of joint ventures, net of income tax
(37,258)
22,430 
Profit before income tax
228,534 
200,839 
Profit attributable to shareholders of PAO NOVATEK
163,742 
156,387 
Normalized profit attributable to shareholders of PAO NOVATEK **
232,930 
156,166 
Normalized basic and diluted earnings per share** (in Russian roubles)
77.29 
51.78 
* 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 2018, our total revenues amounted to RR 831.8 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totaled RR 415.3 billion, representing year-on-year increases of 42.6% and 61.9%, respectively. The increases in total revenues and Normalized EBITDA were largely due to production launch at the first three LNG trains at Yamal LNG and a favourable macro-economic environment with increases in average realized liquids and natural gas prices.

Profit attributable to shareholders of PAO NOVATEK increased to RR 163.7 billion (RR 54.33 per share), or by 4.7%, as compared to 2017. In 2018, our profit was significantly impacted by the recognition of substantial non-cash foreign exchange effects on foreign currency denominated loans of the Group and its joint ventures (the effect of foreign exchange differences in 2017 was less significant). 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 232.9 billion (RR 77.29 per share), or by 49.2%, as compared to 2017.

 
Hydrocarbon Production and Purchased Volumes
 
 
FY 2018 
FY 2017 
Total hydrocarbon production, million barrels of oil equivalent (million boe)
549.
513.3 
Total production (million boe per day)
1.50 
1.41 
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
68,806 
63,399 
Natural gas production by subsidiaries
41,860 
43,113 
Natural gas purchases from joint ventures
24,892 
15,297 
Other purchases of natural gas
8,119 
8,300 
Total natural gas production by subsidiaries and purchases (mmcm)
74,871 
66,710 
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)
11,800 
11,774 
Liquids production by subsidiaries
6,546 
6,759 
Liquids purchases from joint ventures
9,368 
9,315 
Other purchases of liquids
226 
173 
Total liquids production by subsidiaries and purchases (mt)
16,140 
16,247 
 
 Hydrocarbon Sales Volumes
 
FY 2018 
FY 2017 
Natural gas (mmcm)
72,134 
65,004 
including:
 
 
Sales in the Russian Federation
66,073 
64,898 
Sales on international markets
6,061 
106 
Liquids (mt)
15,822 
15,939 
including:
 
 
Stable gas condensate refined products
6,683 
6,743 
Crude oil
4,542 
4,616 
Liquefied petroleum gas
2,676 
2,648 
Stable gas condensate
1,908 
1,918 
Other oil products
13 
14 

Our operational results for 2018 were significantly impacted by the production launch at the first three LNG trains at Yamal LNG, 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 8.5%, and our total liquids production changed marginally (increased by 0.2%).

In 2018, our natural gas sales volumes totaled 72.1 billion cubic meters (bcm), representing an 11.0% increase as compared to 2017, due to sales of LNG purchased primarily from our joint venture Yamal LNG to international markets and an increase in volumes sold in the Russian Federation. As at 31 December 2018, we recorded 2.2 bcm of natural gas in inventory balances relating mainly to natural gas in the Underground Gas Storage Facilities, compared to 1.0 bcm at 31 December 2017. Natural gas inventory balances tend to fluctuate period-to-period depending on the Group’s demand for natural gas withdrawal from the UGSF for the sale in the subsequent periods.

In 2018, our liquid hydrocarbons sales volumes aggregated 15.8 million tons, representing a marginal decrease by 0.7% as compared to 2017. As at 31 December 2018, we recorded 1,069 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 962 mt at 31 December 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 December 2018
31 December 2017
ASSETS
 
 
Non-current assets
923,050
890,726
Property, plant and equipment
408,201
360,051
Investments in joint ventures
244,500
285,326
Long-term loans and receivables
232,922
211,901
Current assets
293,320
153,436
Total assets
1,216,370
1,044,162
LIABILITIES AND EQUITY
 
 
Non-current liabilities
222,752
184,545
Long-term debt
170,043
141,448
Current liabilities
107,023
83,958
Total liabilities
329,775
268,503
Equity attributable to PAO NOVATEK shareholders
868,254
757,839
Non-controlling interest
18,341
17,820
Total equity
886,595
775,659
Total liabilities and equity
1,216,370
1,044,162

The full set of audited consolidated IFRS financial statements for the year ended 31 December 2018, 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 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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