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NOVATEK announces third quarter and nine months 2011 IFRS results

Moscow, 11 November 2011. OAO NOVATEK today released its consolidated interim condensed financial information for the three and nine months ending 30 September 2011 prepared in accordance with International Financial Reporting Standards (“IFRS”).
 
IFRS Financial and Operational Highlights
(in millions of Russian roubles)
 
3Q 2011
  3Q 2010
  
9M 2011
9M  2010
    
  
Revenues
 
 
39,835
28,786
Oil and gas sales
125,129
81,074
-
619
Sales of polymer and insulation tape
-
1,699
145
36
Other revenues
288
116
39,980
29,441
Total revenues
125,417
82,889
(22,881)
(17,587)
Total operating expenses
(68,741)
(49,251)
-
(254)
Net gain (loss) on disposal of interest in subsidiaries
-
1,329
31
408
Other operating income
30
432
17,130
12,008
Profit from operations
56,706
35,399
(5,890)
482
Finance income (expense)
(2,079)
16
10,489
12,483
Profit before income tax
52,359
35,398
8,227
10,061
Profit
41,327
28,203
8,406
10,105
Profit attributable to
OAO NOVATEK shareholders
41,680
28,426
2.77
3.33
Basic and diluted earnings per share
(in Russian roubles)
13.74
9.37
 
In the third quarter 2011, our total revenues increased by 35.8% to RR 39,980 million compared to the corresponding period in 2010, primarily due to an increase in natural gas sales volumes and higher natural gas and liquids prices. The increase in oil and gas sales in the third quarter 2011 resulted in a 42.7% increase in profit from operations to RR 17,130 million compared to RR 12,008 in the 2010 period. The depreciation of the Russian rouble against the US dollar during the third quarter 2011 resulted in a foreign exchange loss of RR 6,315 million and a 16.8% decrease in profit attributable to OAO NOVATEK shareholders to RR 8,406 million, or RR 2.77 per share, as compared to the corresponding period in 2010. Adjusted profit attributable to OAO NOVATEK shareholders1 in the third quarter 2011 amounted to RR 14,721 million, or RR 4.85 per share, compared to RR 9,534 million, or RR 3.14 per share in the 2010 period.
 
In the nine months ended 30 September 2011, our total revenues increased by 51.3% to RR 125,417 million, as compared to the corresponding period in 2010, primarily due to an increase in hydrocarbon sales volumes and prices. The increase in oil and gas revenues resulted in a 46.6% increase in profit attributable to OAO NOVATEK shareholders to RR 41,680 million, or RR 13.74 per share over the same period.
 
Selected Operating Highlights
 
3Q  2011
3Q 2010
Production and Purchased Volumes
9M 2011
9M  2010
11,950
8,374
Natural gas production,
million cubic meters (mmcm)
34,585
26,519
1,329
-
Net share in equity production
of natural gas, mmcm
4,013
-
13,279
8,374
Total natural gas production
38,598
26,519
993
884
Liquids production, thousand tons (mt)
3,053
2,625
1
5
Liquids purchases, mt
4
11
994
889
Total liquids production and purchases
3,057
2,636
 
3Q 2011
3Q 2010
Sales Volumes
9M 2011
9M  2010
12,266
8,123
Natural gas, mmcm
38,088
26,138
658
723
Stable gas condensate, mt
2,137
1,674
208
206
Liquefied petroleum gas, mt
654
662
66
42
Crude oil, mt
168
134
1
2
Oil products. mt
4
8
In the third quarter and nine months of 2011, our natural gas sales volumes increased by 51.0% and 45.7%, respectively, primarily due to an increase in production volumes from subsidiary and associated companies. Over the same periods, our liquids sales volumes decreased by 4.1% and increased by 19.6%, respectively. The decrease in the liquids sales volumes in the third quarter 2011 was primarily due to an increase in the inventory balance of stable gas condensate in storage or transit, whereas our nine month 2011 sales volumes were higher due to an increase in production.
 
At 30 September 2011, we had 325 thousand tons of stable gas condensate in transit and storage as compared to 206 thousand tons as of 30 September 2010. Our natural gas inventory balance as of 30 September 2011 increased to 1,225 million cubic meters compared to 1,058 million cubic meters at the end of the third quarter of 2010.
  
 Selected Balance Sheet Items
(in millions of Russian roubles)
 
 
 
30 September 2011
31 December 2010
ASSETS
 
 
Non-current assets
271,940
255,608
Property, plant and equipment, net
205,802
185,573
Total current assets
50,172
29,565
Total assets
322,112
285,173
LIABILITIES AND EQUITY
 
 
Non-current liabilities
94,249
59,946
Long-term debt
78,732
47,074
Current liabilities
57,194
57,441
Total liabilities
151,443
117,387
Equity attributable to
OAO NOVATEK shareholders
 
169,989
147,119
Non-controlling interest
680
20,667
Total equity
170,669
167,786
Total liabilities and equity
322,112
285,173
 
The full set of consolidated interim condensed IFRS 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.


1 Adjusted profit and earnings per share is profit attributable to OAO NOVATEK shareholders excluding effects of foreign exchange losses.

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”.