NOVATEK Announces Consolidated IFRS Results for the Year Ended 31 December 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

 

Subscribe to newsletter

Please enter the code from image *

19 February 2020

Moscow, 19 February 2020. PAO NOVATEK today released its audited consolidated financial statements for the year ended 31 December 2019 prepared in accordance with International Financial Reporting Standards (“IFRS”).          

IFRS Financial Highlights
(in millions of Russian roubles except as stated)
 
FY 2019 
FY 2018 
Oil and gas sales
852,232 
825,761 
Other revenues
10,571 
5,997 
Total revenues
862,803 
831,758 
Operating expenses
(640,463)
(603,912)
Net gain on disposal of interests in subsidiaries and joint ventures
682,733 
1,645 
Other operating income (loss)
(35,484)
(2,307)
Normalized profit from operations*
221,398 
225,539 
Normalized EBITDA of subsidiaries*
253,552 
259,370 
Normalized EBITDA including share in
EBITDA of joint ventures*
461,157 
415,296 
Finance income (expense)
(15,712)
38,608 
Share of profit (loss) of joint ventures, net of income tax
149,238 
(37,258)
Profit before income tax
1,003,115 
228,534 
Profit attributable to
shareholders of PAO NOVATEK
865,477 
163,742 
Normalized profit attributable to
shareholders of PAO NOVATEK
*,
excluding the effect of foreign exchange gains (losses)
245,002 
232,930 
Normalized basic and diluted earnings per share*,
excluding the effect of foreign exchange gains (losses)
(in Russian roubles)
81.35 
77.29 
Cash used for capital expenditures
162,502 
94,038 
* Excluding the effects from disposal of interests in subsidiaries and joint ventures (recognition of a net gain on disposal and subsequent non-cash revaluation of contingent consideration).

 

Revenues and EBITDA

In 2019, our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, increased to RR 862.8 billion and RR 461.2 billion, or by 3.7% and 11.0%, respectively, as compared to 2018.

The increases in total revenues and Normalized EBITDA were largely due to an increase in our natural gas sales volumes primarily resulted from the production launch at the second and third LNG trains at Yamal LNG in July and November 2018, respectively, and an increase in our domestic average natural gas sales price. The impact of these factors was offset by a decrease in hydrocarbons sales prices on international markets in 2019.

Profit attributable to shareholders of PAO NOVATEK

Profit attributable to shareholders of PAO NOVATEK increased to RR 865.5 billion (RR 287.39 per share), or 5.3 times, as compared to 2018. The Group’s profit in 2019 was significantly affected by the sale of a 40% participation interest in Arctic LNG 2 project and the reorganization of our joint venture Arcticgas. In addition, in both reporting periods, the Group’s subsidiaries and joint ventures recognised substantial non-cash foreign exchange effects on foreign currency denominated loans and cash balances.

Excluding the effects from the disposal of interests in subsidiaries and joint ventures, as well as foreign exchange differences, Normalized profit attributable to shareholders of PAO NOVATEK increased to RR 245.0 billion (RR 81.35 per share), or by 5.2%, as compared to 2018.

Cash used for capital expenditures

Our cash used for capital expenditures increased by RR 68.5 billion, or 72.8%, to RR 162.5 billion in 2019 as compared to RR 94.0 billion in 2018. A significant portion of our capital expenditures related to the development of our LNG projects (Arctic LNG 2 prior to March 2019, the LNG construction center located in the Murmansk region and the Obskiy LNG project), the North-Russkoye field, the Beregovoye field, crude oil deposits of the East-Tarkosalinskoye and the Yarudeyskoye fields, and exploratory drilling.

Hydrocarbon Production and Purchased Volumes
 
FY 2019 
FY 2018 
Total hydrocarbon production,
million barrels of oil equivalent (million boe)
589.9 
549.1 
Total production (million boe per day)
1.62 
1.50 
Natural gas production including proportionate share in
the production of joint ventures, million cubic meters (mmcm)
74,700 
68,806 
Natural gas production by subsidiaries
39,389 
41,860 
Natural gas purchases from joint ventures
31,296 
24,892 
Other purchases of natural gas
8,544 
8,119 
Total natural gas production by subsidiaries
and purchases (mmcm)
79,229 
74,871 
Liquids production including proportionate share in
the production of joint ventures, thousand tons (mt)
12,148 
11,800 
Liquids production by subsidiaries
6,480 
6,546 
Liquids purchases from joint ventures
9,566 
9,368 
Other purchases of liquids
242 
226 
Total liquids production by subsidiaries and purchases (mt)
16,288 
16,140 

In 2019, our total natural gas and liquids production including our proportionate share in the production of joint ventures increased by 8.6% and 2.9%, respectively, as compared to 2018. The main factors positively affecting the production increase were the launch of LNG production at the second and third LNG trains at Yamal LNG in July and November 2018, respectively, and the commencement of crude oil commercial production at the Yaro-Yakhinskoye field of our joint venture Arcticgas in December 2018.

Hydrocarbon Sales Volumes
 
FY 2019 
FY 2018 
Natural gas (mmcm)
78,452 
72,134 
including:
 
 
Sales in the Russian Federation
65,653 
66,073 
Sales on international markets
12,799 
6,061 
Liquids (mt)
16,355 
15,822 
including:
 
 
Stable gas condensate refined products
6,981 
6,683 
Crude oil
4,834 
4,542 
Liquefied petroleum gas
2,777 
2,676 
Stable gas condensate
1,739 
1,908 
Other oil products
24 
13 

In 2019, our natural gas sales volumes totaled 78.5 billion cubic meters (bcm), representing an increase of 8.8% as compared to 2018, due to an increase in LNG sales volumes purchased mainly from our joint ventures OAO Yamal LNG and OOO Cryogas-Vysotsk. As at 31 December 2019, we recorded 1.2 bcm of natural gas in inventory balances compared to 2.2 bcm at 31 December 2018 relating mainly to natural gas in the Underground Gas Storage Facilities. Natural gas inventory balances depend on the Group’s demand for natural gas withdrawals for the sale in the subsequent periods.

In 2019, our liquid hydrocarbons sales volumes totaled 16.4 million tons, representing an increase of 3.4%, as compared to 2018. The increase was mainly due to crude oil purchases from our joint venture Arcticgas resulting from the commencement of crude oil production at the Yaro-Yakhinskoye field in December 2018. As at 31 December 2019, we recorded 801 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 1,069 mt at 31 December 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 December 2019

31 December 2018

ASSETS

 

 

Non-current assets

1,516,371

923,050

Property, plant and equipment

556,798

408,201

Investments in joint ventures

585,340

244,500

Long-term loans and receivables

231,898

232,922

Current assets

496,496

293,320

Total assets

2,012,867

1,216,370

LIABILITIES AND EQUITY

 

 

Non-current liabilities

228,678

222,752

Long-term debt

139,852

170,043

Current liabilities

117,113

107,023

Total liabilities

345,791

329,775

Equity attributable to
PAO NOVATEK shareholders

 

1,647,509

868,254

Non-controlling interest

19,567

18,341

Total equity

1,667,076

886,595

Total liabilities and equity

2,012,867

1,216,370

The full set of audited consolidated IFRS financial statements for the year ended 31 December 2019, 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”.

PDF Download press release
(PDF, 219 KB)