NOVATEK announces consolidated IFRS results for first quarter 2014

29 April 2014

Moscow, 29 April 2014. OAO NOVATEK today released its consolidated interim condensed financial information as of and for the three months ended 31 March 2014 prepared in accordance with International Financial Reporting Standards (“IFRS”). 

IFRS Financial and Operational Highlights
(in millions of Russian roubles)
 
 
1Q 2014
1Q 2013
Oil and gas sales
88,533
80,448
Other revenues
143
117
Total revenues
88,676
80,565
Operating expenses
(53,875)
(51,056)
Net gain on disposal of interests in joint ventures
2,623
-
Other operating income (loss)
(41)
691
Profit from operations
37,383
30,200
Normalized EBITDA of subsidiaries*
38,967
32,857
Normalized EBITDA including share in EBITDA of joint ventures*
42,979
34,860
Finance expense
(4,320)
(1,924)
Share of profit (loss) of joint ventures,
net of income tax
(1,762)
163
Profit before income tax
31,301
28,439
Profit
25,109
22,813
Profit attributable
to OAO NOVATEK shareholders
25,115
22,826
Normalized Profit attributable
to OAO NOVATEK shareholders*
23,016
22,826
Basic and diluted earnings per share
(in Russian roubles)
8.30
7.53
Normalized basic and diluted earnings per share*
(in Russian roubles)
7.60
7.53

* Excluding the effect from disposal of interests in joint ventures.

In the first quarter 2014, our total revenues increased by 10.1% to RR 88.7 billion compared to RR 80.6 billion in the corresponding period of 2013. The growth was mainly due to an increase in average prices for natural gas and liquid hydrocarbons partially driven by the start of sales of higher value added products following the launch of the Ust-Luga Gas Condensate Fractionation and Transshipment Complex.

The Company’s Normalized EBITDA inclusive of subsidiaries (adjusted for the gain on disposal of a 20% share in Artic Russia B.V.) amounted to RR 39.0 billion, representing a 18.6% increase compared to the first quarter 2013.  The Normalized EBITDA including our respective share in the EBITDA of joint ventures increased by 23.3% as compared to the first quarter 2013 to RR 43.0 billion.

The growth in our Normalized EBITDA including our respective share in the EBITDA of joint ventures was positively impacted by higher liquids sales margins due to the launch of the Ust-Luga Complex, significant increase in natural gas and gas condensate production at the North-Urengoyskoye field of the Nortgas joint venture and oil production growth at the East-Tarkosalinskoye field, as well as an increase in the Company’s share in the SeverEnergia joint venture.  The Company’s divestment of its share in the Sibneftegas joint venture in December 2013 produced a negative impact on our EBITDA.

In the first quarter 2014, Normalized Profit attributable to NOVATEK shareholders (adjusted for the effect on disposal of the share in Artic Russia B.V.), increased by 0.8% to RR 23.0 billion, or RR 7.60 per share. Our profit dynamics was negatively impacted by a non-cash foreign exchange loss (including a loss recorded at the joint ventures level) due to the significant depreciation of the Russian ruble against the US dollar in the first quarter 2014. Net of this non-cash foreign exchange loss our Normalized Profit increased by 23.7%.

 
Selected Operating Highlights
 
Production and Purchased Volumes
1Q 2014
1Q 2013
Natural gas production by subsidiaries,
million cubic meters (mmcm)
13,398
13,665
Natural gas purchases from joint ventures, mmcm
284
1,953
Other purchases of natural gas, mmcm
1,677
2,114
Total natural gas production and purchases, mmcm
15,359
17,732
Liquids production by subsidiaries, thousand tons (mt)
1,094
1,096
Liquids purchases from joint ventures, mt
496
239
Other purchases of liquids, mt
7
2
Total liquids production and purchases, mt
1,597
1,337
 
 
Sales Volumes
1Q 2014
1Q 2013
Natural gas, mmcm
17,772
18,739
including sales to end-users, mmcm
16,677
16,632
Stable gas condensate products, mt
965
-
Liquefied petroleum gas, mt
351
265
Crude oil, mt
195
137
Stable gas condensate, mt
32
1,210
Other oil products, mt
2
2

In the first quarter 2014, our natural gas sales volumes decreased to 17.8 billion cubic meters (bcm), or by 5.2%, as compared with the corresponding period in 2013, mainly due to the termination of natural gas purchases from the Sibneftegas joint venture. As at 31 March 2014, the total amount of natural gas recorded as inventory aggregated 837 mmcm as compared to 3,296 mmcm at the end of 2013.

Liquid hydrocarbon sales volumes aggregated 1,545 thousand tons in the first quarter 2014 representing a decrease of 4.3% as compared with the first quarter 2013 due to a decrease in our liquid inventory balances in the first quarter 2013, which was largely offset by an increase in production and purchases of liquid hydrocarbons in the first quarter 2014 by 19.4% as compared to the first quarter 2013. As at 31 March 2014, 434 thousand tons of stable gas condensate and oil products were in transit or storage and recognized as inventory.

 
Selected Balance Sheet Items
(in millions of Russian roubles)
 
 
 
31 March 2014
31 December 2013
ASSETS
 
 
Non-current assets
487,949
515,569
Property, plant and equipment
253,343
243,688
Investments in joint ventures
175,954
210,066
Total current assets
134,958
82,426
Total assets
622,907
597,995
LIABILITIES AND EQUITY
 
 
Non-current liabilities
192,088
165,065
Long-term debt
166,812
141,595
Current liabilities
33,804
59,873
Total liabilities
225,892
224,938
Equity attributable to
OAO NOVATEK shareholders
 
394,271
370,198
Non-controlling interest
2,744
2,859
Total equity
397,015
373,057
Total liabilities and equity
622,907
597,995

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).


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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