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NOVATEK announces second quarter and first half 2009 IFRS results

Moscow, 18 August 2009. OAO NOVATEK today released its consolidated interim condensed financial information for the three and six months ending 30 June 2009 prepared in accordance with International Financial Reporting Standards (“IFRS”).

IFRS Financial and Operational Highlights

(in millions of Russian roubles)

2Q 20092Q 2008 1H 20091H 2008
  Revenues  
22,37620,411Oil and gas sales38,69240,578
501580Sales of polymer and insulation tape8981,131
271361Other revenues539519
23,14821,352 Total revenues40,12942,228
(15,038)(11,822) Total operating expenses(26,417)(22,845)
52- in subsidiaries52-
(210)(195)Other operating income (loss)(153)(179)
7,9529,335 Profit from operations13,61119,204
1,10322Finance income (expense)(1,805)161
9,0669,312Profit before income tax11,80119,298
7,1637,056 Profit for period9,30214,555
7,1787,053 Profit (loss) attributable to OAO NOVATEK shareholders9,31214,556
2.372.32(in Russian roubles)3.074.79

In the second quarter 2009, total revenues grew by 8.4% to RR 23,148 million compared to the corresponding period in 2008, as a result of higher natural gas prices and an increase in liquids sales volumes.

Profit attributable to NOVATEK shareholders in the second quarter 2009 increased by 1.8% to RR 7,178 million, or RR 2.37 per share, due to a non-cash foreign exchange gain during the 2009 period as well as a decrease in the statutory tax rate from 24% in 2008 to 20% as of 1 January 2009.

In the first half 2009, total revenues fell by 5.0% to RR 40,129 million, as compared to the corresponding period in 2008, primarily due to the overall lower pricing environment for liquids in both international and domestic markets.

Profit attributable to NOVATEK shareholders in the first half 2009 decreased by 36% to RR 9,312 million, or RR 3.07 per share, primarily due to lower revenues, an increase in natural gas transportation expense and a significant non-cash foreign exchange loss during the period.

“We are very pleased with the financial and operational results we achieved during the second quarter 2009 compared to prior year and first quarter 2009 results, which were largely due to our ability to maintain natural gas production volumes and significantly increase liquid volumes at our Yurkharovskoye field” according to Leonid V. Mikhelson, CEO and Chairman of the Management Board. “During the period, we also increased our resource base by acquiring a controlling stake in the South-Tambeyskoye field. This acquisition is consistent with our long-term strategy of increasing reserves to support future production growth as well as providing us with a significant position in the development of the Yamal peninsula.”

Selected Operating Highlights

2Q 20092Q 2008Production and Purchase Volumes1H 20091H 2008
7,5637,378(million cubic meters)15,73614,956
159801(million cubic meters)4491,348
7,7228,179 Total natural gas production and purchases16,18516,304
759597Liquids production (thousand tons)1,4681,228
-38Liquids purchases (thousand tons)-70
759635 Total liquids production and purchases1,4681,298

2Q 20092Q 2008Sales Volumes1H 20091H 2008
7,7047,979Natural gas (millions cubic meters)16,26716,370
658383Stable gas condensate (thousand tons)1,051824
188150Liquefied petroleum gas (thousand tons)344308
4572Crude oil (thousand tons)101149
341Oil products (thousand tons)667

In the second quarter and first half 2009, our natural gas sales volumes decreased marginally primarily due to a reduction in our purchases from third parties while our liquids sales volumes increased during both of the 2009 periods primarily due to an increase in unstable gas condensate production at the Yurkharovskoye field.

At 30 June 2009, we had 172 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 149 thousand tons as of 30 June 2008.

Selected Balance Sheet Items

(in millions of Russian roubles)

 30June200931 December 2008
ASSETS  
Non-current assets161,673113,578
Property, plant and equipment, net157,410108,714
Total current assets24,71825,428
Total assets186,391139,907
LIABILITIES AND EQUITY  
Non-current liabilities30,27828,763
Long-term debt17,45019,935
Current liabilities35,81414,169
Total liabilities66,09243,267
OAO NOVATEK shareholders 100,84996,069
Minority interest19,450571
Total equity120,29996,640
Total liabilities and equity186,391139,907

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 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”.