FOR IMMEDIATE RELEASE
NOVATEK Announces Consolidated IFRS Results
for the First Quarter 2019
Moscow, 25 April 2019. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three months ended 31 March 2019 prepared in accordance with International Financial Reporting Standards ("IFRS").
IFRS Financial Highlights
(in millions of Russian roubles except as stated)
|
1Q 2019 |
1Q 2018 |
Oil and gas sales |
231,184 |
178,485 |
Other revenues |
2,922 |
918 |
Total revenues |
234,106 |
179,403 |
Operating expenses |
(175,140) |
(131,037) |
Net gain on disposal of interests in subsidiaries and joint ventures |
308,578 |
1,645 |
Other operating income (loss) |
(914) |
102 |
Normalized profit from operations* |
58,052 |
48,468 |
Normalized EBITDA of subsidiaries* |
65,724 |
56,421 |
Normalized EBITDA including share in EBITDA of joint ventures* |
117,942 |
76,306 |
Finance income (expense) |
(6,021) |
5,402 |
Share of profit (loss) of joint ventures, net of income tax |
70,973 |
1,163 |
Profit before income tax |
431,582 |
56,678 |
Profit attributable to shareholders of PAO NOVATEK |
381,796 |
43,121 |
Normalized profit attributable to
shareholders of PAO NOVATEK** |
65,730 |
46,910 |
Normalized basic and diluted earnings per share** (in Russian roubles) |
21.82 |
15.56 |
Cash used for capital expenditures |
42,476 |
9,712 |
* Excluding the effect from disposal of interests in subsidiaries and joint ventures.
** Excluding the effects from the disposal of interests in subsidiaries and joint ventures, as well as foreign exchange gains (losses).
Revenues and EBITDA
In the first quarter of 2019, our total revenues amounted to RR 234.1 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 117.9 billion, representing quarter-on-quarter increases of 30.5% and 54.6%, respectively.
The increases in total revenues and Normalized EBITDA were largely due to the production launch at the second and third LNG trains at Yamal LNG in the second half of 2018, as well as increases in our sales volumes and net realized prices in Russian roubles terms for the majority of our liquids.
Profit attributable to shareholders of PAO NOVATEK
Profit attributable to shareholders of PAO NOVATEK increased to RR 381.8 billion (RR 126.74 per share), or 8.9 times, as compared to the corresponding period in 2018. The increase was primarily due to the recognition of a net gain on disposal of a 10% participation interest in the Arctic LNG 2 project in March 2019 in the amount of RR 308.6 billion, as well as the recognition of non-cash foreign exchange effects on foreign currency denominated loans of the Group and its joint ventures in both reporting periods.
Excluding the effects from the disposal of interests in subsidiaries and joint ventures and foreign exchange differences, Normalized profit attributable to shareholders of PAO NOVATEK increased to RR 65.7 billion (RR 21.82 per share), or by 40.1%, as compared to the corresponding period in 2018.
Cash used for capital expenditures
Our cash used for capital expenditures in the first quarter of 2019 increased by RR 32.8 billion, or 337.4%, to RR 42.5 billion compared to RR 9.7 billion in the corresponding period in 2018. In both reporting periods, a significant part of our capital expenditures related to the development of our LNG projects (Arctic LNG 2 and the center to build and fabricate large-scale marine facilities located in the Murmansk region) and the North-Russkoye field.
Hydrocarbon Production and Purchased Volumes
|
1Q 2019 |
1Q 2018 |
Total hydrocarbon production, million barrels of oil equivalent (million boe) |
147.1 |
132.5 |
Total production (million boe per day) |
1.63 |
1.47 |
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm) |
18,660 |
16,508 |
Natural gas production by subsidiaries |
10,099 |
10,363 |
Natural gas purchases from joint ventures |
8,921 |
7,587 |
Other purchases of natural gas |
2,219 |
1,729 |
Total natural gas production by subsidiaries and purchases (mmcm) |
21,239 |
19,679 |
Liquids production including proportionate share in the production of joint ventures, thousand tons (mt) |
2,987 |
2,936 |
Liquids production by subsidiaries |
1,600 |
1,628 |
Liquids purchases from joint ventures |
2,313 |
2,300 |
Other purchases of liquids |
56 |
44 |
Total liquids production by subsidiaries and purchases (mt) |
3,969 |
3,972 |
Our total natural gas and liquids production including our proportionate share in the production of joint ventures increased by 13.0% and 1.7%, respectively. The main factor positively impacting the production increase was the launch of LNG production at the second and third LNG trains at Yamal LNG in the second half of 2018.
Hydrocarbon Sales Volumes
|
1Q 2019 |
1Q 2018 |
Natural gas (mmcm) |
22,195 |
20,263 |
including: |
|
|
Sales in the Russian Federation |
18,774 |
19,305 |
Sales on international markets |
3,421 |
958 |
Liquids (mt) |
3,976 |
3,777 |
including: |
|
|
Stable gas condensate refined products |
1,797 |
1,566 |
Crude oil |
1,127 |
1,123 |
Liquefied petroleum gas |
677 |
649 |
Stable gas condensate |
372 |
436 |
Other oil products |
3 |
3 |
In the first quarter of 2019, our natural gas sales volumes totaled 22.2 billion cubic meters (bcm), representing a 9.5% increase as compared to the corresponding period in 2018, due to an increase in LNG sales volumes purchased primarily from our joint venture Yamal LNG and sold on international markets. As at 31 March 2019, we recorded 0.8 bcm of natural gas in inventory balances relating mainly to natural gas in the Underground Gas Storage Facilities, compared to 0.1 bcm at 31 March 2018. Natural gas inventory balances tend to fluctuate period-to-period depending on the Group's demand for natural gas withdrawal from the UGSF for the sale in the subsequent periods.
In the first quarter of 2019, our liquid hydrocarbons sales volumes aggregated 4.0 million tons, representing a 5.3% increase as compared to the corresponding period in 2018. The increase was primarily due to a decrease in our liquid hydrocarbons inventory balance by 62 thousand tons (mt) in the first quarter of 2019 compared to an increase by 140 mt in the first quarter of 2018. As at 31 March 2019, we recorded 1,007 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 1,102 mt at 31 March 2018. Our liquid hydrocarbon inventory balances tend to fluctuate period-on-period and are usually realized in the following reporting period.
Selected Items of Consolidated Statement of Financial Position
(in millions of Russian roubles)
|
31 March 2019 |
31 December 2018 |
ASSETS |
|
|
Non-current assets |
1,236,923 |
923,050 |
Property, plant and equipment |
423,545 |
408,201 |
Investments in joint ventures |
464,987 |
244,500 |
Long-term loans and receivables |
279,244 |
232,922 |
Current assets |
380,791 |
293,320 |
Total assets |
1,617,714 |
1,216,370 |
LIABILITIES AND EQUITY |
|
|
Non-current liabilities |
230,900 |
222,752 |
Long-term debt |
158,363 |
170,043 |
Current liabilities |
120,268 |
107,023 |
Total liabilities |
351,168 |
329,775 |
Equity attributable to
PAO NOVATEK shareholders |
1,247,614 |
868,254 |
Non-controlling interest |
18,932 |
18,341 |
Total equity |
1,266,546 |
886,595 |
Total liabilities and equity |
1,617,714 |
1,216,370 |
The full set of consolidated interim condensed IFRS financial statements, 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:
***
PAO NOVATEK is one of the largest independent natural gas producers in Russia, and in 2017, entered the global gas 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».