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NOVATEK announces consolidated IFRS results for the year ended 31 December 2009

Moscow, 12 March 2010. OAO NOVATEK today released its audited consolidated financial statements for the years ended 31 December 2009 and 2008 prepared in accordance with International Financial Reporting Standards (“IFRS”).

IFRS Financial and Operational Highlights
(in millions of Russian roubles)

FY 2009 FY 2008
Revenues
Oil and gas sales 86,903 76,076
Sales of polymer and insulation tape 1,873 2,098
Other revenues 1,178 1,098
Total revenues 89,954 79,272
Total operating expenses (56,130) (46,916)
Net gain (loss) on disposal of interest in subsidiaries 52 8
Other income (loss) (343) (244)
Profit from operations 33,533 32,120
Finance income (expense) (831) (3,384)
Profit before income tax 32,500 28,589
Profit (loss) 25,722 22,927
Profit (loss) attributable to
OAO NOVATEK shareholders
26,043 22,899
(in Russian roubles) 8.59 7.54

Total revenues grew by 13.5% year-on-year to RR 89,954 million for the twelve months ended 31 December 2009 from RR 79,272 million in the corresponding period of 2008, reflecting the general strength and resiliency of our core business operations despite the difficult economic operating environment. The increase in oil and gas sales was attributable to higher domestic natural gas prices and an increase in liquid hydrocarbon volumes sold.

As a result of the higher revenues and our ability to decrease controllable costs, profit attributable to NOVATEK shareholders increased by 13.7% to RR 26,043million, or RR 8.59 per share as compared to RR 22,899million, or RR 7.54 per share for the corresponding period in 2008.

Selected Operating Highlights

Production and Purchased Volumes FY 2009 FY 2008
Natural gas production (million cubic meters) 32,353 30,430
Natural gas purchases (million cubic meters) 1,000 2,885
Total natural gas production and purchases 33,353 33,315
Liquids production (thousand tons) 3,038 2,563
Liquids purchases (thousand tons) 13 98
Total liquids production and purchases 3,051 2,661

Sales Volumes FY 2009 FY 2008
Natural gas (million cubic meters) 32,937 33,274
Stable gas condensate (thousand tons) 2,170 1,583
Liquefied petroleum gas (thousand tons) 749 618
Crude oil (thousand tons) 198 270
Oil products (thousand tons) 11 159

In 2009, total consolidated natural gas production increased by 1,923 mmcm, or 6.3%, compared to 2008 due to increased production capacity at the Yurkharovskoye field resulting from the launch of the first two stages of the field’s second phase of development in September 2008 and October 2009, respectively. The increase in our production capacity allowed us to decrease 2009 natural gas purchases by 1,885 mmcm, or 65.3%, as compared to 2008. The decrease in total 2009 natural gas sales volumes of 337 mmcm, or 1%, as compared to 2008 was mainly due to an increase in our inventory balance at underground storage facilities in 2009.

Our liquids production increased by 475 thousand tons, or 18.5%, to 3,038 thousand tons compared to 2,563 thousand tons in 2008, due to the expansion of unstable gas condensate production capacity at our Yurkharovskoye field as a result of the field’s ongoing development program. The increase in 2009 unstable gas condensate production, as well as a decrease in liquids inventory balances, allowed us to increase stable gas condensate and LPG sales volumes by 37.1% and 21.2%, respectively, compared to 2008.

At 31 December 2009, we had 111 thousand tons of stable gas condensate in transit or storage and recognized as inventory until such time as it is delivered to customers as compared to 220 thousand tons as of 31 December 2008. In 2009, our stable gas condensate in transit or storage and recognized as inventory decreased by 109 thousand tons compared to a decrease of four thousand tons in 2008.

Selected Balance Sheet Items

(in millions of Russian roubles)

31 December
2009
31 December
2008
ASSETS
Non-current assets 166,264 113,578
Property, plant and equipment, net 161,448 108,714
Total current assets 26,867 25,428
Assets held for sale 508 901
Total assets 193,639 139,907

LIABILITIES AND EQUITY
Non-current liabilities 36,602 28,763
Long-term debt 23,876 19,935
Current liabilities 23,593 14,169
Liabilities associated with assets held for sale 4 335
Total liabilities 60,199 43,267
OAO NOVATEK shareholders 114,301 96,069
Non-controlling interest 19,139 571
Total equity 133,440 96,640
Total liabilities and equity 193,639 139,907


The full set of audited consolidated IFRS financial statements for the years ended 31 December 2008 and 2009 and the related notes thereto as well as 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”.