NOVATEK

Earnings Release • Jul 27, 2016

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RNS Number : 3856F

OAO Novatek

27 July 2016

FOR IMMEDIATE RELEASE

NOVATEK Announces Consolidated IFRS Results

For Second Quarter and First Half 2016

Moscow, 27 July 2016. OAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and six months ended 30 June 2016 prepared in accordance with International Financial Reporting Standards ("IFRS"). 

IFRS Financial Highlights

(in millions of Russian roubles)

2Q 2016	2Q 2015		1H 2016	1H 2015
126,463	111,574	Oil and gas sales	264,674	224,798
925	670	Other revenues	2,065	1,188
127,388	112,244	Total revenues	266,739	225,986
(90,019)	(79,541)	Operating expenses	(187,178)	(153,437)
-	-	Net gain on disposal of interests in joint ventures	73,072	-
(1,731)	(158)	Other operating income (loss)	(760)	(357)
35,638	32,545	Profit from operations	151,873	72,192
46,276	37,317	Normalized EBITDA of subsidiaries*	97,099	82,021
59,507	49,511	Normalized EBITDA including share in EBITDA of joint ventures*	121,643	104,343
74	2,130	Finance income (expense)	990	(5,116)
19,623	13,004	Share of profit of joint ventures, net of income tax	43,004	17,278
55,335	47,679	Profit before income tax	195,867	84,354
45,934	41,920	Profit attributable to OAO NOVATEK shareholders	161,851	72,995
45,934	41,920	Normalized profit attributable to OAO NOVATEK shareholders*	104,174	72,995
15.22	13.88	Normalized basic and diluted earnings per share* (in Russian roubles)	34.51	24.17

* Excluding the effect from disposal of interests in joint ventures.

In the second quarter and first half 2016, our total revenues increased by 13.5% and 18.0%, respectively, compared to the corresponding periods of 2015. Our Normalized EBITDA, inclusive of joint ventures, amounted to RR 59.5 billion in the second quarter 2016 and RR 121.6 billion in the first half 2016, representing an increase of 20.2% and 16.6%, respectively, as compared to the corresponding periods of 2015. The growth in our revenues and EBITDA was largely driven by substantial increase in liquids sales volumes and higher natural gas sales prices. The decrease in net average sales prices in rouble terms for certain types of liquid hydrocarbons due to changes in the respective market benchmarks had a negative impact on the dynamics of our revenues and EBITDA.  

In the second quarter 2016, profit attributable to NOVATEK shareholders increased to RR 45.9 billion (RR 15.22 per share), or by 9.6% as compared to the second quarter 2015. As a result, in the first half 2016, our profit amounted to RR 161.9 billion (RR 53.61 per share), representing an increase of 121.7% as compared to the first half 2015. Profit dynamics was positively impacted by the closing in the first quarter 2016 of a transaction for the sale of a 9.9% equity stake in Yamal LNG to the Silk Road Fund of China. Excluding profit from this transaction, normalized profit attributable to NOVATEK shareholders in the first half 2016 totalled RR 104.2 billion (RR 34.51 per share), representing a 42.7% increase as compared to the first half 2015. Our profit dynamics was also positively impacted by the non-cash items such as foreign exchange effect and the change in fair value of non-commodity financial instruments.

Marketable Hydrocarbon Production and Purchased Volumes

2Q 2016	2Q 2015		1H 2016	1H 2015
16,521	16,890	Natural gas production, million cubic meters (mmcm)	33,757	33,041
11,602	12,278	including production by subsidiaries, mmcm	23,778	24,739
1,840	1,615	Natural gas purchases from joint ventures, mmcm	4,589	3,238
1,939	1,596	Other purchases of natural gas, mmcm	3,950	3,145
15,381	15,489	Total natural gas production by subsidiaries and purchases, mmcm	32,317	31,122
3,119	2,198	Liquids production, thousand tons (mt)	6,327	4,189
1,809	996	including production by subsidiaries, mt	3,664	2,052
2,450	2,184	Liquids purchases from joint ventures, mt	4,981	3,887
13	17	Other purchases of liquids, mt	44	21
4,272	3,197	Total liquids production by subsidiaries and purchases, mt	8,689	5,960

Hydrocarbon Sales Volumes

2Q 2016	2Q 2015		1H 2016	1H 2015
14,062	14,498	Natural gas, mmcm	31,837	30,475
13,045	13,502	including sales to end-users	29,139	28,579
4,139	2,911	Liquids, mt	8,781	5,745
		including:
1,684	1,588	Stable gas condensate products	3,565	3,425
1,157	238	Crude oil	2,345	509
639	545	Stable gas condensate	1,507	821
656	537	Liquefied petroleum gas	1,359	985
3	3	Other petroleum products	5	5

Our natural gas sales volumes totalled 14.1 billion cubic meters (bcm) in the second quarter 2016 and 31.8 bcm in the first half 2016. Compared to the first half 2015 the sales volumes increased by 4.5% which was mainly due to the development of gas trading at the

Saint-Petersburg commodity exchange and higher volumes sold to traders. As at the end of the first half 2016, the total amount of natural gas recorded as inventory totalled 1.7 bcm compared to 1.6 bcm as at the end of the first half 2015.

In the second quarter 2016, liquid hydrocarbon sales volumes amounted to 4,139 mt, representing a 42.2% increase in volumes sold as compared to the second quarter 2015. As a result, in the first half 2016, liquid hydrocarbon sales volumes grew to 8,781 mt, representing a 52.8% increase as compared to the first half 2015. This significant growth was largely due to the launch of the Yarudeyskoye oil field in December 2015 and the Termokarstovoye and Yaro-Yakhinskoye gas and gas condensate fields in the first half 2015. The dynamics of our liquids sales volumes was also positively impacted by decrease in liquids inventories by 240 mt in the first half 2016 compared to the increase by 72 mt in the first half 2015. As at 30 June 2016, 670 mt of liquid hydrocarbons were in transit or storage and recognized as inventory.

Selected Balance Sheet Items

(in millions of Russian roubles)

	30 June 2016	31 December 2015
ASSETS
Non-current assets	782,960	751,552
Property, plant and equipment	332,379	331,712
Investments in joint ventures	200,811	154,725
Long-term loans and receivables	222,565	230,799
Total current assets	125,163	120,485
Assets held for sale	-	7,987
Total assets	908,123	880,024
LIABILITIES AND EQUITY
Non-current liabilities	227,093	282,178
Long-term debt	194,150	252,050
Current liabilities	101,958	169,675
Total liabilities	329,051	451,853
Equity attributable to OAO NOVATEK shareholders	572,930	426,079
Non-controlling interest	6,142	2,092
Total equity	579,072	428,171
Total liabilities and equity	908,123	880,024

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:

Press Service +7 (495) 721 2207 press@novatek.ru	Investor Relations +7 (495) 730 6013 IR@novatek.ru

***

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 80% of Russia's natural gas production and approximately 16% 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».

This information is provided by RNS

The company news service from the London Stock Exchange

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