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NOVATEK reports strong earnings for third quarter 2012

Moscow, 09 November 2012. OAO NOVATEK today released its consolidated interim condensed financial information for the third quarter and nine months ending 30 September 2012 prepared in accordance with International Financial Reporting Standards (“IFRS”).
 
IFRS Financial and Operational Highlights
(in millions of Russian roubles)
 
3Q 2012
   3Q 2011
    
9M 2012
9M 2011
     
   
Revenues
  
  
52,562
39,888
Oil and gas sales
151,698
125,265
169
145
Other revenues
551
288
52,731
40,033
Total revenues
152,249
125,553
(29,845)
(22,921)
Total operating expenses
(88,476)
(68,838)
339
18
Other operating income (loss)
344
(9)
23,225
17,130
Profit from operations
64,117
56,706
2,345
(5,890)
Finance income (expense)
2,372
(2,079)
25,269
10,405
Profit before income tax
64,676
52,106
19,996
8,143
Profit
50,892
41,074
20,003
8,322
Profit attributable to
OAO NOVATEK shareholders
50,911
41,427
6.59
2.74
Basic and diluted earnings
per share(in Russian
roubles)
16.78
13.66
 
 
In the third quarter and nine months 2012, total revenues increased by 31.7% and 21.3%, respectively, as compared to corresponding periods of 2011. The growth was due to an increase in hydrocarbon sales volumes and higher natural gas and liquids prices.
 
In the third quarter 2012, profit from operations increased to RR 23,225 million, or by 35.6% as compared to the corresponding period of 2011, and for the nine months ending 30 September 2012, profit from operations amounted to RR 64,117 million, representing an increase of 13.1% as compared with the corresponding nine months 2011.
 
Profit attributable to OAO NOVATEK shareholders grew by 140.4% in the third quarter 2012 and by 22.9% in the nine months 2012, equaling RR 6.59 per share and RR 16.78 per share, respectively, which was partially attributable to non-cash foreign exchange gain in the third quarter and nine months 2012 as compared with non-cash losses in the same periods of 2011.
 
 
Selected Operating Highlights
 
3Q 2012
3Q 2011
Production and Purchase Volumes
9M 2012
9M 2011
11,609
11,950
Natural gas production,
million cubic meters
(mmcm)
37,112
34,585
1,339
1,329
Equity share in natural gas
production from joint
ventures, mmcm
4,016
4,013
840
-
Gas purchases, mmcm
2,540
-
13,788
13,279
Total natural gas
production, mmcm
43,668
38,598
972
993
Liquids production,
thousand tons (mt)
3,079
3,053
73
-
Liquids purchases from joint
ventures, mt
131
-
4
1
Liquids purchases, mt
9
4
1,049
994
Total liquids production and
purchases, mt
3,219
3,057
 
 
3Q 2012
3Q 2011
Sales Volumes
9M 2012
9M 2011
13,507
12,266
Natural gas,
mmcm
43,004
38,088
737
658
Stable gas condensate,
mt
2,155
2,137
202
208
Liquefied petroleum gas,
mt
664
654
123
66
Crude oil,
mt
308
168
 
 
In the nine months 2012, natural gas sales volumes increased by 12.9% as compared with the corresponding nine month period due to a combined growth in production and purchases. In the third quarter 2012, natural gas sales volumes increased by 10.1% as compared with the third quarter 2011, which was primarily due to an increase in gas purchases.
 
During the third quarter 2012, injection of natural gas into underground gas storage facilities (UGSF) decreased by 732 million cubic meters, as compared with the third quarter 2011, due to accelerated injection rates in the second quarter 2012. As at 30 September 2012, total amount of natural gas injected into UGSF was 1,309 million cubic meters, which is 10.0% higher than at the end of September 2011.
 
In the nine months 2012, liquids sales volumes increased by 5.8% due to production growth and start of gas condensate purchases from OOO SeverEnergia, our joint venture, in April 2012. In the third quarter 2012, liquids sales volumes increased by 14.1% due to increase in purchases and decrease in liquids inventory balance. 
 
 Selected Balance Sheet Items
(in millions of Russian roubles)
 
  
 
30September 2012
31 December 2011
ASSETS
  
  
Non-current assets
350,521 
325,116 
Property, plant and equipment, net
190,032 
166,784 
Total current assets
48,702 
58,316 
Total assets
399,223 
383,432 
LIABILITIES AND EQUITY
 
 
Non-current liabilities
83,120 
91,636 
Long-term debt
65,721 
75,180 
Current liabilities
33,869 
50,114 
Total liabilities
116,989 
141,750 
Equity attributable to
OAO NOVATEK shareholders
 
281,087 
241,013 
Non-controlling interest
1,147 
669 
Total equity
282,234 
241,682 
Total liabilities and equity
399,223 
383,432 
 
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.

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”.