NOVATEK announces third quarter and nine months 2010 IFRS results

12 November 2010

Moscow, 12 November 2010. OAO NOVATEK today released its consolidated interim condensed financial information for the three and nine months ending 30 September 2010 prepared in accordance with International Financial Reporting Standards (“IFRS”). 

IFRS Financial and Operational Highlights
(in millions of Russian roubles)

3Q 2010

3Q 2009

   

9M 2010

9M 2009

      Revenues      
28,786 21,217 Oil and gas sales 81,074 59,909
619 475 Sales of polymer and insulation tape 1,699 1,373
36 279 Other revenues 116 818
29,441 21,971 Total revenues 82,889 62,100
(17,587) (13,638) Total operating expenses (49,251) (40,055)
(254) - Net gain (loss) on disposal of interest in subsidiaries 1,329 52
408 25 Other operating income (loss) 432 (128)
12,008 8,358 Profit from operations 35,399 21,969
482 903 Finance income (expense) 16 (902)
12,483 9,238 Profit before income tax 35,398 21,039
10,061 7,277 Profit for period 28,203 16,579
10,105 7,353 Profit attributable to OAO NOVATEK shareholders 28,426 16,665
3.33 2.43 Basic and diluted earnings per share (in Russian roubles) 9.37 5.50

In the third quarter 2010, our total revenues increased by 34.0% to RR 29,441 million compared to the corresponding period of 2009, primarily due to an increase in natural gas, LPG and stable gas condensate prices and sales volumes. The increase in revenues resulted in a 37.4% increase in profit attributable to NOVATEK shareholders to RR 10,105 million, or RR 3.33 per share, as compared to the corresponding period in 2009.

In the nine months ended 30 September 2010, our total revenues increased by 33.5% to RR 82,889 million, as compared to the corresponding period in 2009, primarily due to an increase in hydrocarbon sales volumes and prices. The increase in oil and gas revenues, as well as the net gain on the disposal of our interest in ZAO Terneftegas in the first quarter of 2010, resulted in a 70.6% increase in profit attributable to NOVATEK shareholders to RR 28,426 million, or RR 9.37 per share over the same period.

Selected Operating Highlights

3Q 2010

3Q 2009

Production and Purchased Volumes

9M 2010

9M 2009

8,360 7,756 Natural gas production (million cubic meters) 26,483 23,492
- 250 Natural gas purchases (million cubic meters) - 699
8,360 8,006 Total natural gas production and purchases 26,483 24,191
884 738 Liquids production (thousand tons) 2,625 2,206
5 6 Liquids purchases (thousand tons) 11 6
889 744 Total liquids production and purchases 2,636 2,212

3Q 2010

3Q 2009

Sales Volumes

9M 2010

9M 2009

8,123 7,763 Natural gas (million cubic meters) 26,138 24,030
723 467 Stable gas condensate (thousand tons) 1,674 1,518
206 189 Liquefied petroleum gas (thousand tons) 662 533
42 48 Crude oil (thousand tons) 134 149
2 3 Oil products (thousand tons) 8 9

In the third quarter and nine months of 2010, the growth in our total consolidated natural gas and liquid hydrocarbon production was mainly due to an increase in production at our Yurkharovskoye field resulting from the launch of the second stage of the field’s second phase development in October 2009.

In the third quarter and nine months of 2010, our natural gas sales volumes increased by 4.6% and 8.8%, respectively, primarily due to an increase in production volumes. Over the same periods liquids sales volumes increased by 37.6% and 12.2%, respectively, primarily due to increased production of unstable gas condensate and a decrease in stable gas condensate inventories.

At 30 September 2010, we had 206 thousand tons of stable gas condensate in transit or storage and recognized as inventory until such time as it is delivered to the port of destination as compared to 202 thousand tons as of 30 September 2009. Our natural gas inventory balance as of 30 September 2010 increased to 1,058 million cubic meters compared to 503 million cubic meters at the end of the 2009 period.

 Selected Balance Sheet Items
(in millions of Russian roubles)

 

30 September 2010

31 December 2009

ASSETS    
Non-current assets 187,785 166,264
Property, plant and equipment, net 181,931 161,448
Total current assets 27,395 26,867
Total assets 215,180 193,639
LIABILITIES AND EQUITY    
Non-current liabilities 38,647 36,602
Long-term debt 23,614 23,876
Current liabilities 16,603 23,593
Total liabilities 55,250 60,199
Equity attributable to OAO NOVATEK shareholders  139,232 114,301
Non-controlling interest 20,698 19,139
Total equity 159,930 133,440
Total liabilities and equity 215,180 193,639

The full set of consolidated interim condensed IFRS financial information, 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).


Certain statements in this press release are not historical facts and are “forward looking” within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934 (hereinafter, the Exchange Act). Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and other information that is not historical information. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.


PAO NOVATEK is the largest independent natural gas producers 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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