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NOVATEK announces consolidated IFRS results for the first quarter 2011

Moscow, 13 May 2011. OAO NOVATEK today released its consolidated interim condensed financial information as of and for the three months ended 31 March 2011 prepared in accordance with International Financial Reporting Standards (“IFRS”).

IFRS Financial and Operational Highlights

(in millions of Russian roubles)

 

1Q 2011

1Q 2010

Revenues

Oil and gas sales

44,793

27,237

Sales of polymer and insulation tape

-

469

Other revenues

68

36

Total revenues

44,861

27,742

Total operating expenses

(23,421)

(15,947)

Net gain on disposal of interest in subsidiaries

-

1,583

Other operating income (loss)

64

(5)

Profit from operations

21,504

13,373

Finance income (expense)

2,738

612

Profit before income tax

23,716

13,984

Profit (loss)

18,800

11,076

Profit (loss) attributable to shareholders of
OAO NOVATEK

18,853

11,182

Basic and diluted earnings per share

(in Russian roubles)

6.22

3.69

In the first quarter 2011, our total revenues increased by 61.7% to RR 44,861 million compared to RR 27,742 million in the corresponding period of 2010, primarily due to an increase in natural gas, stable gas condensate and LPG sales volumes and prices.

We recorded an increase of 68.6% in profit attributable to NOVATEK shareholders, which amounted to RR 18,853 million or RR 6.22 per share, as compared to the corresponding period in 2010 that was primarily due to higher oil and gas sales, cost optimization resulting from the completion of infrastructure projects and foreign exchange gains.

According to NOVATEK’s Chief Financial Officer, Mark Gyetvay, “Our first quarter 2011 results reflect the successful integration of our recent acquisitions into the Company’s operations, the strong domestic and international pricing environment as well as the measures we have taken to optimize costs throughout the hydrocarbon production and processing cycles.”

Selected Operating Highlights

Production and Purchased Volumes

1Q 2011

1Q 2010

Natural gas production

(million cubic meters)

11,939

9,855

Natural gas purchases

(million cubic meters)

1,371

-

Total natural gas production
and purchases (million cubic meters)

13,310

9,855

Liquids production (thousand tons)

1,024

862

Liquids purchases (thousand tons)

1

5

Total liquids production and purchases (thousand tons)

1,025

867

Sales Volumes

1Q 2011

1Q 2010

Natural gas (million cubic meters)

13,992

10,106

Stable gas condensate (thousand tons)

724

412

Liquefied petroleum gas (thousand tons)

229

225

Crude oil (thousand tons)

49

44

Oil products (thousand tons)

1

3

Sales volumes of natural gas increased in the first quarter 2011 due to an increase in NOVATEK’s production capacity and natural gas purchases, the expansion of our customer portfolio and higher natural gas demand in the domestic market. We continued to demonstrate strong organic production growth at the Yurkharovskoye field and initiated natural gas purchases in proportion to our equity share in Sibneftegas’ production.

Total liquids sales volumes increased in the 2011 period due to higher production volumes, driven primarily by organic production growth at the Yurkharovskoye field, and an increase in the realization of stable gas condensate volumes previously recognized as goods in transit or storage at the beginning of the reporting period, compared to the first quarter 2010.

At 31 March 2011, we recorded 282 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 264 thousand tons as at 31 December 2010.

Selected Items from the Statement of Financial Position

(in millions of Russian roubles)

 

 

31 March 2011

31 December 2010

ASSETS

 

 

Non-current assets

259,784

255,608

Property, plant and equipment

189,366

185,573

Current assets

38,980

29,565

Total assets

298,764

285,173

LIABILITIES AND EQUITY

 

 

Non-current liabilities

91,572

59,946

Long-term debt

77,331

47,074

Current liabilities

20,235

57,441

Total liabilities

111,807

117,387

Equity attributable to

OAO NOVATEK shareholders

166,057

147,119

Non-controlling interest

20,900

20,667

Total equity

186,957

167,786

Total liabilities and equity

298,764

285,173

The full set of reviewed IFRS consolidated interim condensed 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).

***

Certain statements in this press release are not historical facts and are “forward looking” within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934 (hereinafter, the Exchange Act). Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and other information that is not historical information. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.


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”.