Press Releases and Events

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).

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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.

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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. Upstream activities of the Company’s subsidiaries and joint ventures 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.