NOVATEK ANNOUNCES CONSOLIDATED IFRS RESULTS
FOR THIRD QUARTER AND NINE MONTHS 2014
Moscow, 29 October 2014 . OAO NOVATEK today released its consolidated interim condensed financial information as of and for the three and nine months ended 30 September 2014 prepared in accordance with International Financial Reporting Standards (“IFRS”).
IFRS Financial and Operational Highlights
(in millions of Russian roubles)
| 3Q 2014 |
|
|
3Q 2013 |
|
|
|
|
|
9M 2014 |
|
|
9M 2013 |
|
| 84,090 |
|
|
75,541 |
|
|
Oil and gas sales |
|
|
260,504 |
|
|
213,907 |
|
| 643 |
|
|
107 |
|
|
Other revenues |
|
|
1,275 |
|
|
336 |
|
| 84,733 |
|
|
75,648 |
|
|
Total revenues |
|
|
261,779 |
|
|
214,243 |
|
| (55,870) |
|
|
(47,080) |
|
|
Operating expenses |
|
|
(165,415) |
|
|
(137,749) |
|
| - |
|
|
- |
|
|
Net gain on disposal of interests
in joint ventures |
|
|
2,623 |
|
|
- |
|
| 100 |
|
|
36 |
|
|
Other operating income |
|
|
1,850 |
|
|
693 |
|
| 28,963 |
|
|
28,604 |
|
|
Profit from operations |
|
|
100,837 |
|
|
77,187 |
|
| 34,129 |
|
|
32,246 |
|
|
Normalized EBITDA of subsidiaries* |
|
|
109,991 |
|
|
86,716 |
|
| 38,757 |
|
|
34,428 |
|
|
Normalized EBITDA including
share in EBITDA of joint ventures* |
|
|
122,059 |
|
|
92,714 |
|
| (6,019) |
|
|
(27) |
|
|
Finance income (expense) |
|
|
(9,531) |
|
|
(5,406) |
|
| (11,777) |
|
|
647 |
|
|
Share of profit (loss) of joint ventures,
net of income tax |
|
|
(9,731) |
|
|
338 |
|
| 11,167 |
|
|
29,224 |
|
|
Profit before income tax |
|
|
81,575 |
|
|
72,119 |
|
| 7,503 |
|
|
23,432 |
|
|
Profit |
|
|
64,526 |
|
|
57,828 |
|
| 7,627 |
|
|
23,458 |
|
|
Normalized Profit attributable
to OAO NOVATEK shareholders* |
|
|
62,633 |
|
|
57,886 |
|
| 2.53 |
|
|
7.75 |
|
|
Normalized basic and diluted earnings per share* (in Russian roubles) |
|
|
20.72 |
|
|
19.10 |
|
* Excluding the effect from disposal of interests in joint ventures in 1Q 2014.
Total revenues in the third quarter and nine months 2014 increased by 12.0% and 22.2%, respectively, as compared to the corresponding periods of 2013. The growth was mainly due to an increase in sales volumes of liquid hydrocarbons and natural gas as well as an increase in the average sales price of natural gas. The increase of total revenues for nine months 2014 was also positively impacted by the growth in the average sales price of liquid hydrocarbons.
Growth in the average natural gas sales price was driven by higher share of end customers in our overall natural gas sales volumes mix, whereas the start of sales of higher value added products from the Ust-Luga Gas Condensate Fractionation and Transshipment Complex launched in June 2013 had a positive impact on the average price of liquids.
In the third quarter 2014, we recorded a year-on-year increase of 5.8% in the Company’s Normalized EBITDA, inclusive of subsidiaries, which totaled RR 34.1 billion. The Normalized EBITDA, including our respective share in the EBITDA of joint ventures, increased by 12.6% as compared to the third quarter 2013 and amounted to RR 38.8 billion. The Company’s Normalized EBITDA, inclusive of subsidiaries, for the first nine months 2014, adjusted for the effect on disposal of the 20% share in Artic Russia B.V., amounted to RR 110.0 billion, while the Normalized EBITDA, including our respective share in the EBITDA of joint ventures (adjusted for the effect on disposal of the share in Artic Russia B.V.) was RR 122.1 billion, which represented an increase of 26.8% and 31.7%, respectively, as compared to the nine months of 2013. The growth in our Normalized EBITDA was positively impacted by a higher share of liquid hydrocarbons in our overall sales volumes mix as well as higher liquids sales margins due to the launch of the Ust-Luga Complex.
In the third quarter 2014, Normalized Profit attributable to NOVATEK shareholders decreased by 67.5% as compared to the third quarter 2013 and amounted to RR 7.6 billion or RR 2.53 per share. Normalized Profit attributable to shareholders of OAO NOVATEK (adjusted for the effect on disposal of the share in Artic Russia B.V.) in the first nine months 2014 increased to RR 62.6 billion (RR 20.72 per share), or by 8.2% as compared to the same period of 2013. Our profit dynamics over the respective reporting periods were negatively impacted by non-cash foreign exchange effects (including at the joint ventures level) as the Russian rouble depreciated against the US Dollar by 20.3% since 31 December 2013. Net of these effects our normalized profit in the third quarter and nine months 2014 increased by 13.2% and 37.0%, respectively, as compared to the corresponding periods of 2013.
Natural Gas Production and Purchased Volumes
| 3Q 2014 |
|
|
3Q 2013 |
|
|
|
|
|
9M 2014 |
|
|
9M 2013 |
|
| 15,196 |
|
|
14,251 |
|
|
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm) |
|
|
45,858 |
|
|
45,067 |
|
| 12,901 |
|
|
12,199 |
|
|
including natural gas production by subsidiaries, mmcm |
|
|
39,430 |
|
|
38,648 |
|
| 1,270 |
|
|
1,744 |
|
|
Natural gas purchases from joint ventures, mmcm |
|
|
2,929 |
|
|
5,567 |
|
| 1,815 |
|
|
1,441 |
|
|
Other purchases of natural gas, mmcm |
|
|
5,340 |
|
|
4,920 |
|
| 15,986 |
|
|
15,384 |
|
|
Total natural gas production of subsidiaries and purchases, mmcm |
|
|
47,699 |
|
|
49,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquids Production and Purchased Volumes
| 3Q 2014 |
|
3Q 2013 |
|
|
|
9M 2014 |
|
9M 2013 |
|
| 1,533 |
|
1,136 |
|
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt) |
|
4,275 |
|
3,511 |
|
| 1,065 |
|
1,045 |
|
including liquids production by subsidiaries, mt |
|
3,244 |
|
3,244 |
|
| 879 |
|
272 |
|
Liquids purchases from joint ventures, mt |
|
1,939 |
|
776 |
|
| 33 |
|
3 |
|
Other purchases of liquids, mt |
|
46 |
|
7 |
|
| 1,977 |
|
1,320 |
|
Total liquids production by subsidiaries and purchases, mt |
|
5,229 |
|
4,027 |
|
|
|
|
|
|
|
|
|
|
|
Hydrocarbon Sales Volumes
| 3Q 2014 |
|
|
3Q 2013 |
|
|
|
|
|
9M 2014 |
|
|
9M 2013 |
|
| 14,944 |
|
|
14,403 |
|
|
Natural gas, mmcm |
|
|
48,244 |
|
|
47,770 |
|
| 14,107 |
|
|
12,928 |
|
|
including sales to end-customers, mmcm |
|
|
45,388 |
|
|
42,568 |
|
| 1,025 |
|
|
690 |
|
|
Stable gas condensate products, mt |
|
|
3,077 |
|
|
690 |
|
| 361 |
|
|
257 |
|
|
Liquefied petroleum gas, mt |
|
|
1,043 |
|
|
783 |
|
| 241 |
|
|
162 |
|
|
Crude oil, mt |
|
|
659 |
|
|
463 |
|
| 67 |
|
|
241 |
|
|
Stable gas condensate, mt |
|
|
142 |
|
|
2,083 |
|
| 3 |
|
|
3 |
|
|
Other oil products, mt |
|
|
8 |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the third quarter 2014, our natural gas sales volumes increased to 14.9 billion cubic meters (bcm), or by 3.8%, as compared with the corresponding period in 2013, due to an increase in production volumes of our subsidiaries at the Yurkharovskoye field and the Olimpiyskiy license area.
For the first nine months 2014, our natural gas sales volumes increased by 1.0% as compared to the first nine months 2013, and aggregated 48.2 bcm. The growth was driven by higher production volumes of our subsidiaries and changes in gas volumes in the underground storages, which was partially offset by a decrease in sales volumes of purchased gas due to termination of natural gas purchases from Sibneftegas following the divestment of our share in this joint venture in December 2013.
The share of end-customers in our overall gas sales volumes mix increased from 89% in the first nine months 2013 to 94% in the same period of 2014. As at 30 September 2014, the total amount of natural gas, injected into the underground storages and recorded as inventory, amounted to 2.6 bcm as compared to 2.4 bcm as at 30 September 2013.
Liquid hydrocarbon sales volumes in the third quarter and nine months 2014 increased by 25.4% and 22.4%, respectively. Sales volumes were positively impacted by higher volumes of gas condensate purchased from our joint ventures due to production growth at Nortgas and the SeverEnergia fields, as well as by an increase in crude oil production by our subsidiaries. However this positive impact was partially offset by an increase of liquid hydrocarbon inventory in the third quarter and nine months 2014 as compared with a decrease in the corresponding periods in 2013. As at 30 September 2014, 552 thousand tons of stable gas condensate and oil products were in transit or storage and recognized as inventory compared to 378 thousand tons as at 30 September 2013.
Selected Balance Sheet Items
(in millions of Russian roubles)
| |
|
|
30 September 2014 |
|
|
31 December 2013 |
|
| ASSETS |
|
|
|
|
|
|
|
| Non-current assets |
|
|
563,684 |
|
|
515,569 |
|
| Property, plant and equipment |
|
|
281,328 |
|
|
243,688 |
|
| Investments in joint ventures |
|
|
182,377 |
|
|
210,066 |
|
| Total current assets |
|
|
105,882 |
|
|
82,426 |
|
| Total assets |
|
|
669,566 |
|
|
597,995 |
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
199,706 |
|
|
165,065 |
|
| Long-term debt |
|
|
171,800 |
|
|
141,595 |
|
| Current liabilities |
|
|
42,424 |
|
|
59,873 |
|
| Total liabilities |
|
|
242,130 |
|
|
224,938 |
|
| Equity attributable to OAO NOVATEK shareholders |
|
|
424,892 |
|
|
370,198 |
|
| Non-controlling interest |
|
|
2,544 |
|
|
2,859 |
|
| Total equity |
|
|
427,436 |
|
|
373,057 |
|
| Total liabilities and equity |
|
|
669,566 |
|
|
597,995 |
|
|
|
|
|
|
|
|
|
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).
***
For further information, please visit www.novatek.ru or contact:
***
OAO NOVATEK is Russia’s largest independent gas producer and the second-largest natural gas producer in Russia. 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 in the prolific Yamal-Nenets Autonomous Region, which is the world’s largest natural gas producing area and accounts for approximately 90% of Russia’s natural gas production and approximately 17% of the world’s gas production. NOVATEK is an open 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».
