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NOVATEK’S Annual General Meeting Of Shareholders approves the company’s Annual Report 2005

Moscow, 2 June 2006. OAONOVATEK held its Annual General Meeting of Shareholders (AGM) which considered the Company’s Annual Report 2005 and allocation of profits based on results of the previous year.

Speaking at the AGM NOVATEK’s CEO, Leonid Mikhelson stated «During 2005, the Company consistently executed its corporate strategy aimed at increasing hydrocarbon production volumes, growing its resource base, constructing new processing facilities and strengthening its market positions».

In 2005, total hydrocarbon production increased by 17% reaching 186 million barrels of oil equivalent (boe), the highest production volumes for natural gas and gas condensate achieved over the Company’s history. Gross production of natural gas totaled 25.2 billion cubic meters (bcm) increasing by 4.3. bcm, or 21%, compared to the previous year. Average daily natural gas production grew in 2005 by 13 million cubic meters (mmcm), or 23%, to 69 mmcm per day. In December 2005, the Company achieved record daily production volumes of 80 mmcm. In 2005, gas condensate output increased by 135 thousand tons, or 7%, exceeding 2 million tons for the year.

At year-end 2005, NOVATEK increased its proven reserves of natural gas, gas condensate and crude oil by 9.5% to 4.6 billion boe. In 2005, the Company’s replaced 311% of its hydrocarbon production through its successful geological and development activities. The volume of proven reserves ensures current production level of 2005, reserves-to-production ratio, for the next 25 years.

In June 2005, NOVATEK commenced operations at its Purovsky gas condensate processing facility (Purovsky Plant) enabling the Company to process 100% of its unstable gas condensate production. The construction of the Purovsky Plant was completed within 18 months During 2005, the Purovsky Plant processed about 1 million tons of unstable gas condensate and produced 764 thousand tons of stable gas condensate and 245 thousand tons of liquefied petroleum gas (LPG). The commencement of operations at the Purovsky Plant enhanced NOVATEK’s marketing distribution channels for liquid hydrocarbons providing flexibility to deliver products to both the international and domestic markets. In 2005, NOVATEK together with Belomorskaya Neftebaza (White Sea Oil Depot) expanded the gas condensate loading and storage facilities in the port of Vitino located in the Murmansk region.

In June 2005, in order to develop deep processing of raw hydrocarbons and their derivatives, NOVATEK commissioned a biaxial-orientated polypropylene plant (BOPP) which design capacity of 25 thousand tons per annum allowing the Company to supply up to one-quarter of Russian market for consumer packaging film materials used in the food, tobacco, perfume, pharmaceutical and textile industries.

During 2005, the Company’s natural gas sales volumes increased by 10 bcm, or 58%, to 27.33 bcm as compared to the prior year. NOVATEK expanded its geography of natural gas sales from 17 to 30 Russian regions, including Chelyabinsk, Samara, Leningrad, Perm and Tyumen regions. The main consumers of the Company’s natural gas are electric power companies, other industrial consumers and regional natural gas distributors.

The commencement of the Purovsky Plant caused significant changes in the composition of liquid hydrocarbon sales in 2005. The portion of oil and oil products sold decreased from 100% to 60%, whereas sales of stable gas condensate and LPG produced at the plant accounted for 40% of the volumes sold. Total liquids sales increased in 2005 by 348 thousand tons, or 17%, over prior period achieving sales volumes of approximately 2,46 million tons. The Purovsky Plant and port facilities in Vitino enabled the Company to approach new markets. In 2005, NOVATEK supplied gas condensate both to European countries and North America selecting a region subject to pricing conditions in these markets.

The Company also presented its consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS). Total revenue and other income grew by 71% in 2005 while the Company’s total debt was reduced by RR 15 billion, or by 62%, to RR 9 billion as compared to 2004. The full consolidation of core subsidiaries combined with increased sales volumes of natural gas and gas condensate contributed to the record results reported in the Company’s financial results for 2005.

According to NOVATEK’s CFO, Mark Gyetvay, «Last year the Company reported revenues and earnings above those planned in the budget largely due to increases in sales volumes and favorable pricing conditions in the domestic and international markets».

The Company obtained a first-time corporate rating from Moody’s (Ba2/ stable outlook) and S&P (BB-/ stable outlook) during the year. Mr. Gyetvay stated, «We continued our aggressive debt reduction program in 2005 significantly strengthening our balance sheet and reducing our finance cost, which contributed to the positive ratings received from the credit rating agencies».

Summing up the results of 2005, NOVATEK’s Board of Director Chairman, Alexander Natalenko stated that «2005 was the most successful year in the Company’s history. We were able to improve the Company’s financial and business performance, complete our assets restructuring and ensure the entry onto the stock exchange markets.»

The AGM approved the Company’s annual report, annual RSA accounts and the allocation of profits for 2005.

The AGM also approved ZAO PricewaterhouseCoopers as the Company’s auditor for 2006.


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”.