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NOVATEK announces consolidated IFRS results for first quarter 2016

Moscow, 27 April 2016. OAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three months ended 31 March 2016 prepared in accordance with International Financial Reporting Standards (“IFRS”).   

IFRS Financial Highlights
(in millions of Russian roubles)
 
  1Q 2016 1Q 2015
Oil and gas sales
138,211
113,224
Other revenues
1,140
518
Total revenues
139,351
113,742
Operating expenses
(97,159)
(73,896)
Net gain on disposal of interests in joint ventures
73,072
-
Other operating income (loss)
971
(199)
Profit from operations
116,235
39,647
Normalized EBITDA of subsidiaries*
50,823
44,704
Normalized EBITDA including share in EBITDA of joint ventures*
62,136
54,832
Finance income (expense)
916
(7,246)
Share of profit of joint ventures,
net of income tax
23,381
4,274
Profit before income tax
140,532
36,675
Profit attributable
to OAO NOVATEK shareholders
115,917
31,075
Normalized profit attributable to OAO NOVATEK shareholders*
58,240
31,075
Normalized earnings per share* (in Russian roubles)
19.29
10.29
* Excluding the effect from disposal of interests in joint ventures.
 

In the first quarter 2016, our total revenues increased to RR 139.4 billion, or by 22.5% compared to the first quarter 2015 largely due to an increase in liquids sales volumes and the combined growth in natural gas sales prices and volumes. Decrease in net average sales prices in rouble terms for LPG and certain types of petroleum products had a negative impact on the dynamics of our revenues.  

The Company’s Normalized EBITDA, including our respective share in the EBITDA of joint ventures, amounted to RR 62.1 billion, representing a 13.3% increase compared to the EBITDA for the first quarter 2015. Profit attributable to NOVATEK shareholders increased by 3.7 times to RR 115.9 billion, as compared to RR 31.1 billion in the first quarter 2015. Profit for the first quarter 2016 was positively impacted by the closing of a transaction for the sale of a 9.9% equity stake in Yamal LNG to the Silk Road Fund of China. Excluding profit from this transaction, normalized profit attributable to NOVATEK shareholders totaled RR 58.2 billion, representing an 87.4% increase as compared to the prior reporting period.  Our profit dynamics was also positively impacted by the non-cash items such as foreign exchange effect and the change in fair value of non-commodity financial instruments.

Our free cash flow increased by 49.5% to RR 45.4 billion as a result of operating cash flow growth by 37.0% and a decrease in cash used for capital expenditures. 

 
Production and Purchased Volumes
  1Q 2016 1Q 2015
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
17,236
16,151
   including production by subsidiaries, mmcm
12,176
12,461
Natural gas purchases from joint ventures, mmcm
2,749
1,623
Other purchases of natural gas, mmcm
2,011
1,549
Total natural gas production by subsidiaries and purchases, mmcm
16,936
15,633
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)
3,208
1,991
   including production by subsidiaries, mt
1,855
1,056
Liquids purchases from joint ventures, mt
2,531
1,703
Other purchases of liquids, mt
31
4
Total liquids production by subsidiaries and purchases, mt
4,417
2,763
  
Hydrocarbon Sales Volumes
  1Q 2016 1Q 2015
Natural gas, mmcm
17,775
15,977
   including sales to end-users
16,094
15,077
Liquids, mt
4,642
2,834
   Including:
 
 
   Stable gas condensate products
1,881
1,837
   Crude oil
1,188
271
   Stable gas condensate
868
276
   Liquefied petroleum gas
703
448
   Other petroleum products
2
2

Our natural gas sales volumes totalled 17.8 bcm, representing an 11.3% increase as compared to 16.0 bcm in the corresponding period in 2015. Higher natural gas sales volumes were a result of consumption recovery by one of our major customers following a temporary decline for technical reasons in the first quarter 2015, as well as the development of gas trading at the commodity exchange and higher volumes sold to traders. In the first quarter 2016 the total amount of natural gas recorded as inventory decreased by 898 mmcm to 429 mmcm as compared to a decrease by 395 mmcm in the first quarter 2015.

Liquid hydrocarbon sales volumes aggregated a record 4.6 million tons in the first quarter 2016 representing an increase of 63.8% as compared to the first quarter 2015. This significant increase was due to the launch of the Yarudeyskoye oil field and the Termokarstovoye gas and gas condensate field, as well as production growth at the Arcticgas fields and a decrease in inventory. As at 31 March 2016, 612 thousand tons of liquid hydrocarbons were in transit or storage and recognized as inventory representing a decrease by 298 thousand tons as compared to the end of 2015.

 
Selected Balance Sheet Items
(in millions of Russian roubles)
 
 
31 March 2016
31 December 2015
ASSETS
 
 
Non-current assets
771,682
751,552
Property, plant and equipment
332,650
331,712
Investments in joint ventures
180,913
154,725
Long-term loans and receivables
227,200
230,799
Total current assets
169,075
120,485
Assets held for sale
-
7,987
Total assets
940,757
880,024
LIABILITIES AND EQUITY
 
 
Non-current liabilities
246,552
282,178
Long-term debt
214,849
252,050
Current liabilities
144,567
169,675
Total liabilities
391,119
451,853
Equity attributable to OAO NOVATEK shareholders 
545,886
426,079
Non-controlling interest
3,752
2,092
Total equity
549,638
428,171
Total liabilities and equity
940,757
880,024

The full set of consolidated interim condensed IFRS financial statements, 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”.