NVTK: OAO Novatek: NOVATEK Announces Consolidated IFRS Results for First Quarter 2014

  NVTK: OAO Novatek: NOVATEK Announces Consolidated IFRS Results for First
  Quarter 2014

UK Regulatory Announcement

MOSCOW

                 NOVATEK ANNOUNCES CONSOLIDATED IFRS RESULTS

                            FOR FIRST QUARTER 2014

Moscow, 29 April 2014. OAO NOVATEK today released its consolidated interim
condensed financial information as of and for the three months ended 31 March
2014 prepared in accordance with International Financial Reporting Standards
(“IFRS”).

                  IFRS Financial and Operational Highlights

                       (in millions of Russian roubles)

                                                        1Q 2014   1Q 2013
Oil and gas sales                                         88,533     80,448
Other revenues                                            143        117
Total revenues                                            88,676     80,565
Operating expenses                                        (53,875)   (51,056)
Net gain on disposal of interests in joint ventures       2,623      -
Other operating income (loss)                             (41)       691
Profit from operations                                    37,383     30,200
Normalized EBITDA of subsidiaries*                        38,967     32,857
Normalized EBITDA including share in EBITDA of joint      42,979     34,860
ventures*
Finance expense                                           (4,320)    (1,924)
Share of profit (loss) of joint ventures,                 (1,762)    163
net of income tax
Profit before income tax                                  31,301     28,439
Profit                                                    25,109     22,813
Profit attributable                                       25,115     22,826
to OAO NOVATEK shareholders
Normalized Profit attributable                            23,016     22,826
to OAO NOVATEK shareholders*
Basic and diluted earnings per share ^
                                                          8.30       7.53
(in Russian roubles)
Normalized basic and diluted earnings per share*          7.60       7.53
(in Russian roubles)

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

In the first quarter 2014, our total revenues increased by 10.1% to RR 88.7
billion compared to RR80.6 billion in the corresponding period of 2013. The
growth was mainly due to an increase in average prices for natural gas and
liquid hydrocarbons partially driven by the start of sales of higher value
added products following the launch of the Ust-Luga Gas Condensate
Fractionation and Transshipment Complex.

The Company’s Normalized EBITDA inclusive of subsidiaries (adjusted for the
gain on disposal of a 20% share in Artic Russia B.V.) amounted to RR 39.0
billion, representing a 18.6% increase compared to the first quarter 2013. The
Normalized EBITDA including our respective share in the EBITDA of joint
ventures increased by 23.3% as compared to the first quarter 2013 to RR
43.0billion.

The growth in our Normalized EBITDA including our respective share in the
EBITDA of joint ventures was positively impacted by higher liquids sales
margins due to the launch of the Ust-Luga Complex, significant increase in
natural gas and gas condensate production at the North-Urengoyskoye field of
the Nortgas joint venture and oil production growth at the
East-Tarkosalinskoye field, as well as an increase in the Company’s share in
the SeverEnergia joint venture. The Company’s divestment of its share in the
Sibneftegas joint venture in December 2013 produced a negative impact on our
EBITDA.

In the first quarter 2014, Normalized Profit attributable to NOVATEK
shareholders (adjusted for the effect on disposal of the share in Artic Russia
B.V.), increased by 0.8% to RR 23.0 billion, or RR 7.60 per share. Our profit
dynamics was negatively impacted by a non-cash foreign exchange loss
(including a loss recorded at the joint ventures level) due to the significant
depreciation of the Russian ruble against the US dollar in the first quarter
2014. Net of this non-cash foreign exchange loss our Normalized Profit
increased by 23.7%.

                        Selected Operating Highlights

Production and Purchased Volumes                        1Q 2014  1Q 2013
Natural gas production by subsidiaries,                  13,398    13,665
million cubic meters (mmcm)
Natural gas purchases from joint ventures, mmcm          284       1,953
Other purchases of natural gas, mmcm                     1,677     2,114
Total natural gas production and purchases, mmcm         15,359    17,732
Liquids production by subsidiaries, thousand tons (mt)   1,094     1,096
Liquids purchases from joint ventures, mt                496       239
Other purchases of liquids, mt                           7         2
Total liquids production and purchases, mt               1,597     1,337

Sales Volumes                       1Q 2014  1Q 2013
Natural gas, mmcm                    17,772    18,739
including sales to end-users, mmcm   16,677    16,632
Stable gas condensate products, mt   965       -
Liquefied petroleum gas, mt          351       265
Crude oil, mt                        195       137
Stable gas condensate, mt            32        1,210
Other oil products, mt               2         2

In the first quarter 2014, our natural gas sales volumes decreased to 17.8
billion cubic meters (bcm), or by 5.2%, as compared with the corresponding
period in 2013, mainly due to the termination of natural gas purchases from
the Sibneftegas joint venture. As at 31 March 2014, the total amount of
natural gas recorded as inventory aggregated 837 mmcm as compared to 3,296
mmcm at the end of 2013.

Liquid hydrocarbon sales volumes aggregated 1,545 thousand tons in the first
quarter 2014 representing a decrease of 4.3% as compared with the first
quarter 2013 due to a decrease in our liquid inventory balances in the first
quarter 2013, which was largely offset by an increase in production and
purchases of liquid hydrocarbons in the first quarter 2014 by 19.4% as
compared to the first quarter 2013. As at 31 March 2014, 434 thousand tons of
stable gas condensate and oil products were in transit or storage and
recognized as inventory.

                         Selected Balance Sheet Items

                       (in millions of Russian roubles)

                              31 March 2014  31 December 2013
ASSETS
Non-current assets              487,949         515,569
Property, plant and equipment   253,343         243,688
Investments in joint ventures   175,954         210,066
Total current assets            134,958         82,426
Total assets                    622,907         597,995
LIABILITIES AND EQUITY
Non-current liabilities         192,088         165,065
Long-term debt                  166,812         141,595
Current liabilities             33,804          59,873
Total liabilities               225,892         224,938
Equity attributable to
                                394,271         370,198
OAO NOVATEK shareholders
Non-controlling interest        2,744           2,859
Total equity                    397,015         373,057
Total liabilities and equity    622,907         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:

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

Contact:

OAO Novatek
 
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