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OAO «NOVATEK» (RTS: NVTK) today announced record earnings in its full year 2004 consolidated financial results, which have been prepared in accordance with International Financial Reporting Standards («IFRS») and audited by PricewaterhouseCoopers.

The record financial performance during 2004 was attributable to increased levels of natural gas and liquids production at the Company’s core producing fields, combined with strong commodity prices throughout the year.

«The record financial results reflect our ongoing efforts to consolidate and rationalize our asset base, in order to focus on maximizing production growth at our core producing assets. The per-unit net margins continued to improve throughout the year, due to the higher commodity pricing environment, the successful optimization of the sales mix, and ongoing strict cost control," stated Leonid v. Mikhelson, Chief Executive Officer and Chairman of the Management Board.

Total revenues and other income grew by 46% year on year to RR 25,198 million for the twelve months ended 31 December 2004 from RR 17,256 million in the corresponding period of 2003. Net income for the full year 2004 increased by 74% to RR 5,694 million, or RR 2,510 per share (basic and diluted), from RR 3,281 million, or RR 1,895 per share (basic and diluted), in 2003.

During 2004, total revenues from the sale of natural gas increased by RR 5,331 million, or 70%, to RR 12,943 million from RR 7,612 million in 2003. The increase was largely attributable to growth in production volumes and an increase in average realized sales prices. Total revenues from the sale of crude oil and gas condensate almost tripled, up RR 4,119 million to RR 6,387 million in 2004 from RR 2,268 million in 2003.

The Company divested its oil and gas construction services business in June 2004, which reduced revenues during the period by RR 1,205 million, or 37%, when compared with 2003. The disposal of this business segment is consistent with the Company’s long-term strategy to focus its activities on its core oil and gas producing entities.

«Our financial performance over the past year reflects our strategy to demonstrate sustainable production volume growth at attractive returns on average capital employed," commented Mark A. Gyetvay, Chief Financial Officer. «Our goal is not so much to improve on our 2004 results as to demonstrate consistent performance year in and year out, by growing production volumes and reserves at attractive finding and production costs, which will create value for all shareholders».

Novatek continued to invest in upstream development projects and downstream processing facilities during the year. Net capital expenditure amounted to approximately RR 7.4 billion, as compared to RR 5 billion in 2003.

Mr. Mikhelson stated that: «We continued to build our world class two million ton per annum Purovsky gas condensate processing facility and related infrastructure, which will serve as the platform for the processing of our growing production volumes of gas condensate, and will also enhance our ability to improve netback margins through export sales channels». The Purovsky processing plant was formally commissioned on 3 June 2005, approximately 18 months after the commencement of construction.

PAO NOVATEK is one of the largest independent natural gas producers 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 Area, 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.