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NOVATEK announces consolidated IFRS results for the year ended 31 December 2013

Moscow, 25 February 2014. OAO NOVATEK today released its audited consolidated financial statements for the years ended 31 December 2013 and 2012 prepared in accordance with the International Financial Reporting Standards (“IFRS”). 

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

* excluding gain (loss) on disposal of interests in subsidiaries and joint ventures.

Total revenues grew by 41.3% year-on-year to RR 298.2 billion for the twelve months ended 31 December 2013 from RR 211.0 billion in 2012. The growth was due to an increase in hydrocarbon sales volumes and higher natural gas and liquids prices. The increase in natural gas prices was due to a significant expansion of the share of end-users in our total gas volumes sales mix, changes in the geography of sales in favor of the remote regions, as well as due to an increase in regulated gas prices, whereas the increase in the average price of liquids was mainly due to the start of petroleum product sales from the Ust-Luga Gas Condensate Fractionation and Transshipment Complex launched in June 2013.

In 2013, we recorded a year-on-year increase of 28.0% in our Normalized EBITDA, which totaled RR 121.8 billion (adjusted for the gains from the sale of a 20% stake in Yamal LNG joint venture and an asset swap, whereby NOVATEK’s 51% stake in Sibneftegas was swapped for 40% stake in Artic Russia B.V.). The growth in our Normalized EBITDA was positively impacted by the expansion of the share of liquids in our total hydrocarbon volumes sales mix, as well as the enhanced margins from processing stable gas condensate at the Ust-Luga complex.

In 2013, Normalized Profit attributable to NOVATEK shareholders, adjusted for the net gains from the asset sale and swap deals, increased by 14.8% to RR 79.8 billion, or RR 26.35 per share, as compared to RR 69.5 billion, or RR 22.91 per share, in 2012. The dynamics of profit was negatively impacted by non-cash foreign exchange effect. Net of this effect our Normalized Profit increased by 28.4%.

Selected Operating Highlights 

Production and Purchased Volumes	FY 2013	FY 2012
Natural gas production, million cubic meters (mmcm)	52,214	50,507
Natural gas purchases from joint ventures, mmcm	7,799	5,335
Other purchases of natural gas, mmcm	6,443	3,533
Total natural gas production and purchases, mmcm	66,456	59,375
Liquids production, thousand tons (mt)	4,327	4,193
Liquids purchases from joint ventures, mt	1,170	259
Other purchases of liquids, mt	15	38
Total liquids production and purchases, mt	5,512	4,490

Sales Volumes	FY 2013	FY 2012
Natural gas, mmcm	64,152	58,880
including sales to end-users, mmcm	57,021	40,806
Stable gas condensate, mt	2,117	2,847
Ust-Luga products, mt	1,606	-
Liquefied petroleum gas, mt	1,078	905
Crude oil, mt	627	442

In 2013, natural gas sales volumes increased to 64.2 billion cubic meters (bcm), or by 9.0%, as compared with 2012, mainly due to production growth at the Yurkharovskoye field and the fields of our joint ventures. The share of end-users in our total gas volumes sales mix increased from 69% in 2012 to 89% in 2013. As at 31 December 2013, the total amount of natural gas recorded as inventory aggregated approximately 3.3 bcm.

Liquid hydrocarbon sales volumes aggregated 5,438 thousand tons in 2013 representing an increase of 29.4% as compared with 2012. The increase is due to higher gas condensate production at our joint ventures and an increase in crude oil output at the East-Tarkosalinskoye field. As at the year-end, 409 thousand tons of stable gas condensate and oil products were in transit or storage and recognized as inventory, as compared with 461 thousand tons of stable gas condensate as at 31 December 2012.

	31December 2013	31December 2012
ASSETS
Non-current assets	515,569	404,890
Property, plant and equipment	243,688	197,376
Investments in joint ventures	210,066	189,136
Total current assets	82,426	58,243
Total assets	597,995	463,133
LIABILITIES AND EQUITY
Non-current liabilities	165,065	116,702
Long-term debt	141,595	97,805
Current liabilities	59,873	55,130
Total liabilities	224,938	171,832
Equity attributable to OAO NOVATEK shareholders	370,198	290,050
Non-controlling interest	2,859	1,251
Total equity	373,057	291,301
Total liabilities and equity	597,995	463,133

The full set of audited consolidated IFRS financial statements for the years ended
31 December 2013 and 2012 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 website (www.novatek.ru).

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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.