24 Jul 2019 12:00
FOR IMMEDIATE RELEASE
NOVATEK Announces Consolidated IFRS Resultsfor the Second Quarter and the First Half 2019
Moscow, 24 July 2019. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and six months ended 30 June 2019 prepared in accordance with International Financial Reporting Standards ("IFRS").
IFRS Financial Highlights(in millions of Russian roubles except as stated)
2Q 2019 | 2Q 2018 |
| 1H 2019 | 1H 2018 |
215,789 | 194,818 | Oil and gas sales | 446,973 | 373,303 |
2,724 | 1,004 | Other revenues | 5,646 | 1,922 |
218,513 | 195,822 | Total revenues | 452,619 | 375,225 |
(157,507) | (135,606) | Operating expenses | (332,647) | (266,643) |
- | - | Net gain on disposal of interests in subsidiaries and joint ventures | 308,578 | 1,645 |
(247) | (621) | Other operating income (loss) | (1,161) | (519) |
60,759 | 59,595 | Normalized profit from operations* | 118,811 | 108,063 |
69,193 | 68,958 | Normalized EBITDA of subsidiaries* | 134,917 | 125,379 |
115,835 | 101,339 | Normalized EBITDA including share in EBITDA of joint ventures* | 233,777 | 177,645 |
(277) | 7,380 | Finance income (expense) | (6,298) | 12,782 |
23,282 | (18,215) | Share of profit (loss) of joint ventures,net of income tax | 94,255 | (17,052) |
83,764 | 48,760 | Profit before income tax | 515,346 | 105,438 |
69,175 | 32,041 | Profit attributable to shareholders of PAO NOVATEK | 450,971 | 75,162 |
64,296 | 54,289 | Normalized profit attributable toshareholders of PAO NOVATEK** | 130,026 | 101,199 |
21.35 | 18.01 | Normalized basic and diluted earnings per share** (in Russian roubles) | 43.17 | 33.57 |
31,203 | 22,052 | Cash used for capital expenditures | 73,679 | 31,764 |
* 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 second quarter of 2019, our total revenues amounted to RR 218.5 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totaled RR 115.8 billion, representing increases of 11.6% and 14.3%, respectively, as compared to the corresponding period in 2018. Our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, during the six months ended 30 June 2019 amounted to RR 452.6 billion and RR 233.8 billion, representing increases of 20.6% and 31.6%, respectively, as compared to the prior year reporting period.
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.
Profit attributable to shareholders of PAO NOVATEK
Profit attributable to shareholders of PAO NOVATEK increased to RR 69.2 billion (RR 22.97 per share), or by 115.9%, in the second quarter of 2019 and to RR 451.0 billion (RR 149.73 per share), or six-fold, in the first half of 2019 as compared to the corresponding periods in 2018. Our profit was significantly impacted by the recognition of a net gain on disposal of a 10% participation interest in Arctic LNG 2 project in March 2019 in the amount of RR 308.6 billion, and 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 effect from the disposal of interests in subsidiaries and joint ventures, as well as foreign exchange differences, Normalized profit attributable to shareholders of PAO NOVATEK totaled RR 64.3 billion (RR 21.35 per share) in the second quarter of 2019 and RR 130.0 billion (RR 43.17 per share) in the first half of 2019, representing increases of 18.4% and 28.5%, respectively, as compared to the corresponding periods in 2018.
Cash used for capital expenditures
Our cash used for capital expenditures increased to RR 31.2 billion, or by 41.5%, in the second quarter of 2019 and to RR 73.7 billion, or by 132.0%, in the first half of 2019 as compared to the prior year corresponding periods. A significant portion of our capital expenditures related to the development of our LNG projects (Arctic LNG 2 project prior to March 2019 and the LNG construction center located in the Murmansk region), as well as the North-Russkoye field and crude oil deposits of the East-Tarkosalinskoye and the Yarudeyskoye fields.
Hydrocarbon Production and Purchased Volumes
2Q 2019 | 2Q 2018 |
| 1H 2019 | 1H 2018 |
149.0 | 131.8 | Total hydrocarbon production, million barrels of oil equivalent (million boe) | 296.1 | 264.3 |
1.64 | 1.45 | Total production (million boe per day) | 1.64 | 1.46 |
18,910 | 16,418 | Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm) | 37,570 | 32,926 |
9,935 | 10,562 | Natural gas production by subsidiaries | 20,034 | 20,925 |
7,909 | 4,420 | Natural gas purchases from joint ventures | 16,830 | 12,007 |
1,971 | 1,708 | Other purchases of natural gas | 4,190 | 3,437 |
19,815 | 16,690 | Total natural gas production by subsidiaries and purchases (mmcm) | 41,054 | 36,369 |
3,035 | 2,928 | Liquids production including proportionate share in the production of joint ventures,thousand tons (mt) | 6,022 | 5,864 |
1,607 | 1,650 | Liquids production by subsidiaries | 3,207 | 3,278 |
2,366 | 2,322 | Liquids purchases from joint ventures | 4,679 | 4,622 |
51 | 56 | Other purchases of liquids | 107 | 100 |
4,024 | 4,028 | Total liquids production by subsidiaries and purchases (mt) | 7,993 | 8,000 |
Total natural gas production, including our proportionate share in the production of joint ventures, for the second quarter and the first half of 2019 increased by 15.2% and 14.1%, respectively, and our total liquids production increased by 3.7% and 2.7%, respectively, as compared to the corresponding periods in 2018. 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
2Q 2019 | 2Q 2018 |
| 1H 2019 | 1H 2018 |
18,764 | 15,149 | Natural gas (mmcm) | 40,959 | 35,412 |
|
| including: |
|
|
15,114 | 14,496 | Sales in the Russian Federation | 33,888 | 33,801 |
3,650 | 653 | Sales on international markets | 7,071 | 1,611 |
4,130 | 4,273 | Liquids (mt) | 8,106 | 8,050 |
|
| including: |
|
|
1,841 | 2,028 | Stable gas condensate refined products | 3,638 | 3,594 |
1,214 | 1,148 | Crude oil | 2,341 | 2,271 |
674 | 658 | Liquefied petroleum gas | 1,351 | 1,307 |
396 | 436 | Stable gas condensate | 768 | 872 |
5 | 3 | Other petroleum products | 8 | 6 |
In the second quarter and the first half of 2019, our natural gas sales volumes totaled 18.8 billion and 41.0 billion cubic meters (bcm), representing increases of 23.9% and 15.7%, respectively, as compared to the corresponding periods in 2018, due to an increase in LNG sales volumes purchased from our joint ventures OAO Yamal LNG and OOO Cryogas-Vysotsk. As at 30 June 2019, we recorded 1.4 bcm of natural gas in inventory balances compared to 1.3 bcm at 30 June 2018 relating mainly to natural gas in the Underground Gas Storage Facilities. Natural gas inventory balances depend on the Group's demand for natural gas withdrawals for the sale in the subsequent periods.
In the second quarter of 2019, our liquid hydrocarbons sales volumes decreased by 3.3% to 4.1 million tons compared to 4.3 million tons in the prior year corresponding period mainly due to changes in inventory balances. In the first half of 2019, our liquid hydrocarbons sales volumes increased marginally by 0.7% as compared to the first half of 2018. As at 30 June 2019, we recorded 852 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 806 mt at 30 June 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)
| 30 June 2019 | 31 December 2018 |
ASSETS |
|
|
Non-current assets | 1,229,888 | 923,050 |
Property, plant and equipment | 455,605 | 408,201 |
Investments in joint ventures | 451,844 | 244,500 |
Long-term loans and receivables | 256,555 | 232,922 |
Current assets | 381,807 | 293,320 |
Total assets | 1,611,695 | 1,216,370 |
LIABILITIES AND EQUITY |
|
|
Non-current liabilities | 219,905 | 222,752 |
Long-term debt | 144,777 | 170,043 |
Current liabilities | 109,675 | 107,023 |
Total liabilities | 329,580 | 329,775 |
Equity attributable toPAO NOVATEK shareholders
| 1,264,340 | 868,254 |
Non-controlling interest | 17,775 | 18,341 |
Total equity | 1,282,115 | 886,595 |
Total liabilities and equity | 1,611,695 | 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:
Press Service+7 (495) 721 2207press@novatek.ru | Investor Relations+7 (495) 730 6013IR@novatek.ru |
***
PAO NOVATEK is the largest independent natural gas producer 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».