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NOVATEK announces consolidated IFRS results for the third quarter and the nine months 2017

Moscow, 25 October 2017. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and nine months ended 30 September 2017 prepared in accordance with International Financial Reporting Standards (“IFRS”).  

IFRS Financial Highlights
(in millions of Russian roubles except as stated)
3Q17
3Q16
 
9M17
9M16
129,970
125,767 
Oil and gas sales
412,001 
390,441 
733
716 
Other revenues
2,160 
2,781 
130,703
126,483 
Total revenues
414,161 
393,222 
(94,385)
(93,458)
Operating expenses
(297,782)
(280,636)
Net gain on disposal of
interests in joint ventures
73,072 
(222)
707 
Other operating income (loss)
403
(53)
36,096 
33,732 
Profit from operations
116,782 
185,605 
45,094 
43,833 
Normalized EBITDA of subsidiaries*
142,707 
140,932 
59,270 
57,726 
Normalized EBITDA including share in EBITDA of joint ventures*
183,522 
179,369 
5,061
1,101 
Finance income (expense)
9,873 
2,091 
6,875 
9,401 
Share of profit (loss) of joint ventures,
net of income tax
16,733 
52,405 
48,032 
44,234 
Profit before income tax
143,388 
240,101 
37,737 
36,494 
Profit attributable to
shareholders of PAO NOVATEK
111,998 
198,345 
34,905 
31,236 
Normalized profit attributable to
shareholders of PAO NOVATEK **
113,022 
97,745 
11.57 
10.35 
Normalized basic and diluted earnings per share** (in Russian roubles)
37.47 
32.38 
* Excluding the effect from disposal of interests in joint ventures.

** Excluding the effects from the disposal of interests in joint ventures, as well as foreign exchange gains (losses).

In the third quarter of 2017, our total revenues amounted to RR 130.7 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 59.3 billion, representing increases of 3.3% and 2.7%, respectively, as compared to the corresponding period in 2016. In the nine months 2017, our total revenues amounted to RR 414.2 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 183.5 billion, representing increases of 5.3% and 2.3%, respectively, as compared to the corresponding period in 2016. The increases in total revenues and Normalized EBITDA in both periods were largely due to an increase in liquids and natural gas sales prices.

Profit attributable to shareholders of PAO NOVATEK increased to RR 37.7 billion (RR 12.51 per share), or by 3.4%, in the third quarter of 2017 and decreased to RR 112.0 billion (RR 37.13 per share), or by 43.5%, in the nine months 2017 as compared to the corresponding periods of 2016. In 2016, our profit was significantly impacted by the closing in the first quarter 2016 of a transaction for the sale of a 9.9% equity stake in Yamal LNG, as well as by the foreign exchange differences (including at the joint ventures level). Excluding these effects, Normalized profit attributable to shareholders of PAO NOVATEK totalled RR 34.9 billion (RR 11.57 per share) in the third quarter 2017 and RR 113.0 billion (RR 37.47 per share) in the nine months 2017, representing an increase of 11.7% and 15.6%, respectively, as compared to the corresponding periods of 2016.

Marketable Hydrocarbon Production and Purchased Volumes 
3Q17
3Q16
 
9M17
9M16
122.4 
131.5 
Total hydrocarbon production,
million barrels of oil equivalent (boe)
374.7 
405.0 
1.33 
1.43 
Total production (million boe per day)
1.37 
1.48 
14,998 
16,195 
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
46,032 
49,952 
10,153 
11,304 
Natural gas production by subsidiaries
31,674 
35,082 
2,165 
1,812 
Natural gas purchases from joint ventures
9,822 
6,401 
2,407 
2,174 
Other purchases of natural gas
6,203 
6,124 
14,725 
15,290 
Total natural gas production by subsidiaries and purchases (mmcm)
47,699 
47,607 
2,921 
3,060 
Liquids production including proportionate share in the production of joint ventures,
thousand tons (mt)
8,806 
9,387 
1,683 
1,784 
Liquids production by subsidiaries
5,083 
5,448 
2,312 
2,382 
Liquids purchases from joint ventures
6,951 
7,363 
53 
42 
Other purchases of liquids
131 
86 
4,048 
4,208 
Total liquids production by subsidiaries
and purchases (mt)
12,165 
12,897 
 
Hydrocarbon Sales Volumes
3Q17
3Q16
 
9M17
9M16
13,888 
14,456 
Natural gas (mmcm)
47,020 
46,293 
13,388 
13,445 
including sales to end-customers
44,497 
42,584 
3,720 
4,183 
Liquids (mt)
11,905 
12,964 
 
 
including:
 
 
1,477 
1,647 
Stable gas condensate refined products
5,077 
5,212 
1,108 
1,157 
Crude oil
3,391 
3,502 
656 
660 
Liquefied petroleum gas
1,978 
2,019 
475 
715 
Stable gas condensate
1,449 
2,222 
Other petroleum products
10 

In the third quarter 2017, our natural gas sales volumes totalled 13.9 billion cubic meters (bcm), representing a decrease of 3.9% as compared to the corresponding period in 2016, and were in line with the planned contracted delivery schedule. Overall, in the nine months 2017, our natural gas sales volumes totalled 47.0 bcm representing an increase of 1.6% as compared to the corresponding period in 2016 due to the increased demand for natural gas from end-customers in the first half of 2017 resulted, among other factors, from weather conditions. As at 30 September 2017, the amount of natural gas recorded as inventory totalled 1.4 bcm as compared to 2.5 bcm at the end of the third quarter of 2016.

In the third quarter 2017, liquid hydrocarbons sales volumes amounted to 3.7 million tons, representing an 11.1% decrease in volumes sold as compared to the third quarter 2016. In the nine months 2017, liquid hydrocarbon sales volumes totalled 11.9 million tons, representing an 8.2% decrease as compared to the nine months 2016. The decrease in both periods was due to a natural decline in gas condensate production volumes at mature fields of our subsidiaries and joint ventures, as well as an increase in liquids inventories as compared to a decrease in the corresponding periods in 2016. As at 30 September 2017, we recorded 969 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 626 mt at 30 September 2016.

Selected Items of Consolidated Statement of Financial Position
(in millions of Russian roubles) 
  
 
30 September 2017
31 December 2016
ASSETS
 
 
Non-current assets
857,594
831,074
Property, plant and equipment
341,506
331,795
Investments in joint ventures
277,223
259,650
Long-term loans and  receivables
207,037
209,145
Current assets
150,190
132,760
Total assets
1,007,784
963,834
LIABILITIES AND EQUITY
 
 
Non-current liabilities
184,426
197,323
Long-term debt
142,189
161,296
Current liabilities
92,980
108,791
Total liabilities
277,406
306,114
Equity attributable to
PAO NOVATEK shareholders
 
714,390
648,350
Non-controlling interest
15,988
9,370
Total equity
730,378
657,720
Total liabilities and equity
1,007,784
963,834

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”.