NOVATEK

Earnings Release • Oct 25, 2017

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RNS Number : 5985U

PAO Novatek

25 October 2017

FOR IMMEDIATE RELEASE

NOVATEK Announces Consolidated IFRS Results

for the Third Quarter and the Nine Months 2017

Moscow, 25 October 2017. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and nine months ended 30 September 2017 prepared in accordance with International Financial Reporting Standards ("IFRS"). 

IFRS Financial Highlights

(in millions of Russian roubles except as stated)

3Q 2017	3Q 2016		9M 2017	9M 2016
129,970	125,767	Oil and gas sales	412,001	390,441
733	716	Other revenues	2,160	2,781
130,703	126,483	Total revenues	414,161	393,222
(94,385)	(93,458)	Operating expenses	(297,782)	(280,636)
-	-	Net gain on disposal of interests in joint ventures	-	73,072
(222)	707	Other operating income (loss)	403	(53)
36,096	33,732	Profit from operations	116,782	185,605
45,094	43,833	Normalized EBITDA of subsidiaries*	142,707	140,932
59,270	57,726	Normalized EBITDA including share in EBITDA of joint ventures*	183,522	179,369
5,061	1,101	Finance income (expense)	9,873	2,091
6,875	9,401	Share of profit (loss) of joint ventures, net of income tax	16,733	52,405
48,032	44,234	Profit before income tax	143,388	240,101
37,737	36,494	Profit attributable to shareholders of PAO NOVATEK	111,998	198,345
34,905	31,236	Normalized profit attributable to shareholders of PAO NOVATEK **	113,022	97,745
11.57	10.35	Normalized basic and diluted earnings per share** (in Russian roubles)	37.47	32.38

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

** Excluding the effects from the disposal of interests in joint ventures, as well as foreign exchange gains (losses).

In the third quarter of 2017, our total revenues amounted to RR 130.7 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 59.3 billion, representing increases of 3.3% and 2.7%, respectively, as compared to the corresponding period in 2016. In the nine months 2017, our total revenues amounted to RR 414.2 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 183.5 billion, representing increases of 5.3% and 2.3%, respectively, as compared to the corresponding period in 2016. The increases in total revenues and Normalized EBITDA in both periods were largely due to an increase in liquids and natural gas sales prices.

Profit attributable to shareholders of PAO NOVATEK increased to RR 37.7 billion (RR 12.51 per share), or by 3.4%, in the third quarter of 2017 and decreased to RR 112.0 billion (RR 37.13 per share), or by 43.5%, in the nine months 2017 as compared to the corresponding periods of 2016. In 2016, our profit was significantly impacted by the closing in the first quarter 2016 of a transaction for the sale of a 9.9% equity stake in Yamal LNG, as well as by the foreign exchange differences (including at the joint ventures level). Excluding these effects, Normalized profit attributable to shareholders of PAO NOVATEK totalled RR 34.9 billion (RR 11.57 per share) in the third quarter 2017 and RR 113.0 billion (RR 37.47 per share) in the nine months 2017, representing an increase of 11.7% and 15.6%, respectively, as compared to the corresponding periods of 2016.

Marketable Hydrocarbon Production and Purchased Volumes

3Q 2017	3Q 2016		9M 2017	9M 2016
122.4	131.5	Total hydrocarbon production, million barrels of oil equivalent (boe)	374.7	405.0
1.33	1.43	Total production (million boe per day)	1.37	1.48
14,998	16,195	Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)	46,032	49,952
10,153	11,304	Natural gas production by subsidiaries	31,674	35,082
2,165	1,812	Natural gas purchases from joint ventures	9,822	6,401
2,407	2,174	Other purchases of natural gas	6,203	6,124
14,725	15,290	Total natural gas production by subsidiaries and purchases (mmcm)	47,699	47,607
2,921	3,060	Liquids production including proportionate share in the production of joint ventures, thousand tons (mt)	8,806	9,387
1,683	1,784	Liquids production by subsidiaries	5,083	5,448
2,312	2,382	Liquids purchases from joint ventures	6,951	7,363
53	42	Other purchases of liquids	131	86
4,048	4,208	Total liquids production by subsidiaries and purchases (mt)	12,165	12,897

Hydrocarbon Sales Volumes

3Q 2017	3Q 2016		9M 2017	9M 2016
13,888	14,456	Natural gas (mmcm)	47,020	46,293
13,388	13,445	including sales to end-customers	44,497	42,584
3,720	4,183	Liquids (mt)	11,905	12,964
		including:
1,477	1,647	Stable gas condensate refined products	5,077	5,212
1,108	1,157	Crude oil	3,391	3,502
656	660	Liquefied petroleum gas	1,978	2,019
475	715	Stable gas condensate	1,449	2,222
4	4	Other petroleum products	10	9

In the third quarter 2017, our natural gas sales volumes totalled 13.9 billion cubic meters (bcm), representing a decrease of 3.9% as compared to the corresponding period in 2016, and were in line with the planned contracted delivery schedule. Overall, in the nine months 2017, our natural gas sales volumes totalled 47.0 bcm representing an increase of 1.6% as compared to the corresponding period in 2016 due to the increased demand for natural gas from end-customers in the first half of 2017 resulted, among other factors, from weather conditions. As at 30 September 2017, the amount of natural gas recorded as inventory totalled 1.4 bcm as compared to 2.5 bcm at the end of the third quarter of 2016.

In the third quarter 2017, liquid hydrocarbons sales volumes amounted to 3.7 million tons, representing an 11.1% decrease in volumes sold as compared to the third quarter 2016. In the nine months 2017, liquid hydrocarbon sales volumes totalled 11.9 million tons, representing an 8.2% decrease as compared to the nine months 2016. The decrease in both periods was due to a natural decline in gas condensate production volumes at mature fields of our subsidiaries and joint ventures, as well as an increase in liquids inventories as compared to a decrease in the corresponding periods in 2016. As at 30 September 2017, we recorded 969 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 626 mt at 30 September 2016.

Selected Items of Consolidated Statement of Financial Position

(in millions of Russian roubles)

	30 September 2017	31 December 2016
ASSETS
Non-current assets	857,594	831,074
Property, plant and equipment	341,506	331,795
Investments in joint ventures	277,223	259,650
Long-term loans and  receivables	207,037	209,145
Current assets	150,190	132,760
Total assets	1,007,784	963,834
LIABILITIES AND EQUITY
Non-current liabilities	184,426	197,323
Long-term debt	142,189	161,296
Current liabilities	92,980	108,791
Total liabilities	277,406	306,114
Equity attributable to PAO NOVATEK shareholders	714,390	648,350
Non-controlling interest	15,988	9,370
Total equity	730,378	657,720
Total liabilities and equity	1,007,784	963,834

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

***

PAO NOVATEK is one of the largest independent natural gas producers 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 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».

This information is provided by RNS

The company news service from the London Stock Exchange

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