NOVATEK Announces Consolidated IFRS Results for the First Quarter 2019

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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25 April 2019

Moscow, 25 April 2019. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three months ended 31 March 2019 prepared in accordance with International Financial Reporting Standards (“IFRS”). 

IFRS Financial Highlights
(in millions of Russian roubles except as stated)
 
1Q 2019 
1Q 2018 
Oil and gas sales
231,184 
178,485 
Other revenues
2,922 
918 
Total revenues
234,106 
179,403 
Operating expenses
(175,140)
(131,037)
Net gain on disposal of interests in subsidiaries and joint ventures
308,578 
1,645 
Other operating income (loss)
(914)
102 
Normalized profit from operations*
58,052 
48,468 
Normalized EBITDA of subsidiaries*
65,724 
56,421 
Normalized EBITDA including share in EBITDA of joint ventures*
117,942 
76,306 
Finance income (expense)
(6,021)
5,402 
Share of profit (loss) of joint ventures, net of income tax
70,973 
1,163 
Profit before income tax
431,582 
56,678 
Profit attributable to
shareholders of PAO NOVATEK
381,796 
43,121 
Normalized profit attributable to shareholders of PAO NOVATEK**
65,730 
46,910 
Normalized basic and diluted earnings per share** (in Russian roubles)
21.82 
15.56 
Cash used for capital expenditures
42,476 
9,712 
* Excluding the effect from disposal of interests in subsidiaries and joint ventures.
** Excluding the effects from the disposal of interests in subsidiaries and joint ventures, as well as foreign exchange gains (losses).


Revenues and EBITDA

In the first quarter of 2019, our total revenues amounted to RR 234.1 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 117.9 billion, representing quarter-on-quarter increases of 30.5% and 54.6%, respectively.

The increases in total revenues and Normalized EBITDA were largely due to the production launch at the second and third LNG trains at Yamal LNG in the second half of 2018, as well as increases in our sales volumes and net realized prices in Russian roubles terms for the majority of our liquids.

Profit attributable to shareholders of PAO NOVATEK

Profit attributable to shareholders of PAO NOVATEK increased to RR 381.8 billion (RR 126.74 per share), or 8.9 times, as compared to the corresponding period in 2018. The increase was primarily due to the recognition of a net gain on disposal of a 10% participation interest in the Arctic LNG 2 project in March 2019 in the amount of RR 308.6 billion, as well as the recognition of non-cash foreign exchange effects on foreign currency denominated loans of the Group and its joint ventures in both reporting periods.

Excluding the effects from the disposal of interests in subsidiaries and joint ventures and foreign exchange differences, Normalized profit attributable to shareholders of PAO NOVATEK increased to RR 65.7 billion (RR 21.82 per share), or by 40.1%, as compared to the corresponding period in 2018.

Cash used for capital expenditures

Our cash used for capital expenditures in the first quarter of 2019 increased by RR 32.8 billion, or 337.4%, to RR 42.5 billion compared to RR 9.7 billion in the corresponding period in 2018. In both reporting periods, a significant part of our capital expenditures related to the development of our LNG projects (Arctic LNG 2 and the center to build and fabricate large-scale marine facilities located in the Murmansk region) and the North-Russkoye field. 

Hydrocarbon Production and Purchased Volumes
 
1Q 2019 
1Q 2018 
Total hydrocarbon production, million barrels of oil equivalent (million boe)
147.1 
132.5 
Total production (million boe per day)
1.63 
1.47 
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
18,660 
16,508 
Natural gas production by subsidiaries
10,099 
10,363 
Natural gas purchases from joint ventures
8,921 
7,587 
Other purchases of natural gas
2,219 
1,729 
Total natural gas production by subsidiaries and purchases (mmcm)
21,239 
19,679 
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)
2,987 
2,936 
Liquids production by subsidiaries
1,600 
1,628 
Liquids purchases from joint ventures
2,313 
2,300 
Other purchases of liquids
56 
44 
Total liquids production by subsidiaries and purchases (mt)
3,969 
3,972 

 Our total natural gas and liquids production including our proportionate share in the production of joint ventures increased by 13.0% and 1.7%, respectively. The main factor positively impacting the production increase was the launch of LNG production at the second and third LNG trains at Yamal LNG in the second half of 2018.

Hydrocarbon Sales Volumes
 
1Q 2019 
1Q 2018 
Natural gas (mmcm)
22,195 
20,263 
including:
 
 
Sales in the Russian Federation
18,774 
19,305 
Sales on international markets
3,421 
958 
Liquids (mt)
3,976 
3,777 
including:
 
 
Stable gas condensate refined products
1,797 
1,566 
Crude oil
1,127 
1,123 
Liquefied petroleum gas
677 
649 
Stable gas condensate
372 
436 
Other oil products

 In the first quarter of 2019, our natural gas sales volumes totaled 22.2 billion cubic meters (bcm), representing a 9.5% increase as compared to the corresponding period in 2018, due to an increase in LNG sales volumes purchased primarily from our joint venture Yamal LNG and sold on international markets. As at 31 March 2019, we recorded 0.8 bcm of natural gas in inventory balances relating mainly to natural gas in the Underground Gas Storage Facilities, compared to 0.1 bcm at 31 March 2018. 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 the first quarter of 2019, our liquid hydrocarbons sales volumes aggregated 4.0 million tons, representing a 5.3% increase as compared to the corresponding period in 2018. The increase was primarily due to a decrease in our liquid hydrocarbons inventory balance by 62 thousand tons (mt) in the first quarter of 2019 compared to an increase by 140 mt in the first quarter of 2018. As at 31 March 2019, we recorded 1,007 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 1,102 mt at 31 March 2018. 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 2019
31 December 2018
ASSETS
 
 
Non-current assets
1,236,923
923,050
Property, plant and equipment
423,545
408,201
Investments in joint ventures
464,987
244,500
Long-term loans and receivables
279,244
232,922
Current assets
380,791
293,320
Total assets
1,617,714
1,216,370
LIABILITIES AND EQUITY
 
 
Non-current liabilities
230,900
222,752
Long-term debt
158,363
170,043
Current liabilities
120,268
107,023
Total liabilities
351,168
329,775
Equity attributable toPAO NOVATEK shareholders
1,247,614
868,254
Non-controlling interest
18,932
18,341
Total equity
1,266,546
886,595
Total liabilities and equity
1,617,714
1,216,370

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 the largest independent natural gas producer in Russia, and in 2017, entered the global LNG 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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