NOVATEK Announces Consolidated IFRS Results for the Second Quarter and the First Half 2018

July 25, 2018

Moscow, 25 July 2018. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and six months ended 30 June 2018 prepared in accordance with International Financial Reporting Standards (“IFRS”). 

IFRS Financial Highlights
(in millions of Russian roubles except as stated)
2Q
2018
2Q
2017
 
1H
2018
1H
2017
194,818 
128,030 
Oil and gas sales
373,303 
282,031 
1,004 
800 
Other revenues
1,922 
1,427 
195,822 
128,830 
Total revenues
375,225 
283,458 
(135,606)
(94,033)
Operating expenses
(266,643)
(203,397)
Net gain on disposal of
interests in joint ventures
1,645 
(621)
351 
Other operating income (loss)
(519)
625 
59,595 
35,148 
Profit from operations*
108,063 
80,686 
68,958 
43,798 
Normalized EBITDA of subsidiaries*
125,379 
97,613 
101,339 
56,072 
Normalized EBITDA including share in
EBITDA of joint ventures*
177,645 
124,252 
7,380 
13,414 
Finance income (expense)
12,782 
4,812 
(18,215)
(33,768)
Share of profit (loss) of joint ventures,
net of income tax
(17,052)
9,858 
48,760 
14,794 
Profit before income tax
105,438 
95,356 
32,041 
3,243 
Profit attributable to
shareholders of PAO NOVATEK
75,162 
74,261 
54,289 
33,772 
Normalized profit attributable to
shareholders of PAO NOVATEK **
101,199 
78,117 
18.01 
11.20 
Normalized basic and diluted earnings per share** (in Russian roubles)
33.57 
25.89 
* 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 second quarter of 2018, our total revenues amounted to RR 195.8 billion and EBITDA, including our share in EBITDA of joint ventures, totaled RR 101.3 billion, representing increases of 52.0% and 80.7%, respectively, as compared to the corresponding period in 2017. Our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, during the six months ended 30 June 2018 amounted to RR 375.2 billion and RR 177.6 billion, representing increases of 32.4% and 43.0%, respectively, as compared to the corresponding period in 2017. The increases in our total revenues and Normalized EBITDA were largely due to the production launch of the first LNG train at Yamal LNG at the end of 2017, as well as an increase in average realized liquids and natural gas prices.

In the second quarter and the first half of 2018, profit attributable to shareholders of PAO NOVATEK increased to RR 32.0 billion (RR 10.63 per share), or by approximately ten-fold, and to RR 75.2 billion (RR 24.93 per share), or by 1.2%, respectively, as compared to the corresponding periods in 2017. Our profit in the reporting periods was significantly impacted by the recognition of substantial non-cash foreign exchange effects on foreign currency denominated loans of the Group and its joint ventures. Excluding the effect of foreign exchange differences, as well as the one-time effect from the disposal of interests in joint ventures, Normalized profit attributable to shareholders of PAO NOVATEK totaled RR 54.3 billion (RR 18.01 per share) in the second quarter of 2018 and RR 101.2 billion (RR 33.57 per share) in the first half of 2018, representing increases of 60.8% and 29.5%, respectively, as compared to the corresponding periods in 2017. 

Hydrocarbon Production and Purchased Volumes
2Q
2018
2Q
2017
 
1H
2018
1H
2017
131.8 
127.5 
Total hydrocarbon production,
million barrels of oil equivalent
(million boe)
264.3 
258.0 
1.45 
1.40 
Total production (million boe per day)
1.46 
1.43 
16,418 
15,762 
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
32,926 
31,912 
10,562 
10,952 
Natural gas production by subsidiaries
20,925 
22,211 
4,420 
2,356 
Natural gas purchases from joint ventures
12,007 
7,657 
1,708 
1,936 
Other purchases of natural gas
3,437 
3,796 
16,690 
15,244 
Total natural gas production by subsidiaries and purchases (mmcm)
36,369 
33,664 
2,928 
2,918 
Liquids production including proportionate share in the production of joint ventures,
thousand tons (mt)
5,864 
5,885 
1,650 
1,687 
Liquids production by subsidiaries
3,278 
3,400 
2,322 
2,296 
Liquids purchases from joint ventures
4,622 
4,639 
56 
41 
Other purchases of liquids
100 
78 
4,028 
4,024 
Total liquids production by subsidiaries
and purchases (mt)
8,000 
8,117 
 
Hydrocarbon Sales Volumes
2Q
2018
2Q
2017
 
1H
2018
1H
2017
15,149 
14,380 
Natural gas (mmcm)
35,412 
33,132 
 
 
including:
 
 
14,496 
14,380 
Sales in the Russian Federation
33,801 
33,132 
653 
Sales on international markets
1,611 
4,273 
4,072 
Liquids (mt)
8,050 
8,185 
 
 
including:
 
 
2,028 
1,763 
Stable gas condensate refined products
3,594 
3,600 
1,148 
1,211 
Crude oil
2,271 
2,283 
658 
645 
Liquefied petroleum gas
1,307 
1,322 
436 
450 
Stable gas condensate
872 
974 
Other petroleum products

Our operational results for the second quarter and the first half of 2018 were significantly impacted by the production launch of the first LNG train at Yamal LNG at the end of 2017, as well as the acquisitions of new producing fields at the end of 2017 and in the first quarter of 2018 (the Beregovoye, the West-Yaroyakhinskoye and the Syskonsyninskoye fields). As a result, our total natural gas production for the second quarter and the first half of 2018 increased by 4.2% and 3.2%, respectively, and our total liquids production changed insignificantly (increased by 0.3% and decreased 0.4%, respectively).

In the second quarter and the first half of 2018, our natural gas sales volumes totaled 15.1 billion and 35.4 billion cubic meters (bcm), representing increases of 5.3% and 6.9%, respectively, as compared to the corresponding periods in 2017, due to the commencement of sales of LNG purchased from our joint venture Yamal LNG to international markets from December 2017 and an increase in volumes sold in the Russian Federation. As at the end of the second quarter of 2018, our cumulative natural gas inventory balances mainly in the Underground Gas Storage Facilities, the Gas Transmission System and own pipeline infrastructure totaled 1.3 bcm as compared to 0.6 bcm at the end of the second quarter of 2017.

In the second quarter of 2018, our liquid hydrocarbons sales volumes amounted to 4.3 million tons, representing a 4.9% increase compared to the second quarter of 2017 mainly from the sale of stable gas condensate refined products in transit at the end of the first quarter of 2018. In the first half of 2018, our liquid hydrocarbon sales volumes totaled 8.1 million tons, representing a marginal decrease by 1.6% compared to the corresponding prior year period. As at 30 June 2018, we recorded 806 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 699 mt at 30 June 2017. 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) 

 
30 June
2018
31 December
2017
ASSETS
 
 
Non-current assets
954,363
890,726
Property, plant and equipment
415,612
360,051
Investments in joint ventures
267,081
285,326
Long-term loans and receivables
235,237
211,901
Current assets
157,416
153,436
Total assets
1,111,779
1,044,162
LIABILITIES AND EQUITY
 
 
Non-current liabilities
207,345
184,545
Long-term debt
155,318
141,448
Current liabilities
76,330
83,958
Total liabilities
283,675
268,503
Equity attributable to
PAO NOVATEK shareholders
808,299
757,839
Non-controlling interest
19,805
17,820
Total equity
828,104
775,659
Total liabilities and equity
1,111,779
1,044,162

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).

 

 

 

CONTACT FOR MEDIA

Monika Ścianek

Tel. +48 501 410 177