27 Oct 2021 12:00
FOR IMMEDIATE RELEASE
NOVATEK Announces Consolidated IFRS Resultsfor the Third Quarter and the Nine Months 2021
Moscow, 27 October 2021. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and nine months ended 30 September 2021 prepared in accordance with International Financial Reporting Standards ("IFRS").
IFRS Financial Highlights(in millions of Russian roubles except as stated)
3Q 2021 | 3Q 2020 | 9M 2021 | 9M 2020 | |
269,877 | 161,211 | Oil and gas sales | 771,178 | 484,447 |
6,830 | 2,560 | Other revenues | 14,564 | 7,825 |
276,707 | 163,771 | Total revenues | 785,742 | 492,272 |
(207,057) | (125,570) | Operating expenses | (581,040) | (388,344) |
662 | - | Net gain on disposal of interests in subsidiaries | 662 | - |
984 | 352 | Other operating income (loss) | 548 | (46,961) |
70,634 | 38,553 | Normalized profit from operations* | 205,250 | 104,790 |
84,886 | 51,260 | Normalized EBITDA of subsidiaries* | 244,758 | 134,298 |
181,800 | 93,883 | Normalized EBITDA including share inEBITDA of joint ventures* | 488,866 | 265,821 |
(2,743) | 88,487 | Finance income (expense) | (15,783) | 179,037 |
61,978 | (86,804) | Share of profit (loss) of joint ventures,net of income tax | 135,189 | (160,028) |
130,531 | 40,236 | Profit before income tax | 325,318 | 75,976 |
112,906 | 13,172 | Profit attributable toshareholders of PAO NOVATEK | 277,345 | 24,056 |
104,937 | 35,720 | Normalized profit attributable toshareholders of PAO NOVATEK*, excludingthe effect of foreign exchange gains (losses) | 269,668 | 110,487 |
34.95 | 11.89 | Normalized basic and diluted earnings per share*,excluding the effect of foreign exchange gains(losses) (in Russian roubles) | 89.81 | 36.77 |
47,566 | 39,821 | Cash used for capital expenditures | 136,393 | 142,304 |
* Excluding the effects from disposal of interests in subsidiaries and joint ventures (recognition of a net gain on disposal and subsequent non-cash revaluation of contingent consideration).
COVID-19 and Macro-Economic Environment
In 2021, the global economic activity began a gradual improvement from the negative influence of the COVID-19 virus, but questions remain on the sustainability of this recovery. Various countries have reported rising infection rates, the emergence of new virus strains (Delta and Lambda variants) and differing degrees of vaccination penetration. These have all led to stricter lockdown measures in some countries and growing uncertainties on the pace of global economic recovery.
Under these factors, the OPEC+ participants maintained restricted crude oil production targets that, together with the severe cold weather in Europe, Asia, and North America in the beginning of the year, has led to significant increases in benchmark hydrocarbons prices in the first quarter 2021. Starting from May 2021, OPEC+ began to gradually lift the restrictions on crude oil production targets due to the increased mobility of population, signs of renewed economic activities and the recovery of crude oil demand in major consumer countries. In July 2021, the OPEC+ participants made a decision to further increase crude oil production volumes and extended the agreement on production restrictions until the end of 2022.
Nevertheless, the crude oil supply still lagged behind global demand due to faster than expected economic recovery. Benchmark crude oil prices continued to increase in the second and third quarters 2021 and this increase has positively affected our sales prices in the reporting period.
The European and Asian natural gas markets were impacted by demand recovery, weather factor (cold winter and hot summer, low wind speeds in Europe and droughts in South America) and supply disruptions that have led to low storage levels in key consuming regions and a strong price rally in the third quarter 2021.
Further developments surrounding the COVID-19 virus spread remain uncertain and are outside of the Group's management control, and the scale and duration of these developments are difficult to assess. Despite these uncertainties, the Group continues to demonstrate strong operating results and implement its investment projects in accordance with the Group's approved corporate strategy. The Group's management continues to assess the current situation and present macro-economic environment and takes appropriate actions if deemed necessary.
Revenues and EBITDA
In the third quarter 2021, our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, amounted to RR 276.7 billion and RR 181.8 billion, respectively, representing increases of 69.0% and 93.6% as compared to the prior year period. In the nine months ended 30 September 2021, our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, amounted to RR 785.7 billion and RR 488.9 billion, respectively, representing increases of 59.6% and 83.9%, as compared to the corresponding period in 2020.
The increases in total revenues and Normalized EBITDA were largely due to an increase in global commodity prices for hydrocarbons, as well as the launch of gas condensate deposits of the North-Russkiy cluster in August 2020.
Profit attributable to shareholders of PAO NOVATEK
Profit attributable to shareholders of PAO NOVATEK increased to RR 112.9 billion (RR 37.60 per share) in the third quarter 2021 and to RR 277.3 billion (RR 92.36 per share) in the nine months 2021 as compared to RR 13.2 billion and RR 24.1 billion, respectively, in the corresponding periods in 2020.
Normalized profit attributable to shareholders of PAO NOVATEK (excluding the effects from foreign exchange differences and the disposal of interests in subsidiaries) totaled RR 104.9 billion (RR 34.95 per share) in the third quarter 2021 and RR 269.7 billion (RR 89.81 per share) in the nine months 2021, representing increases of 2.9 times and 2.4 times, respectively, as compared to the corresponding periods in 2020.
The main factors positively impacting the Group's Normalized profit in the third quarter and in the nine months 2021 were improved macroeconomic conditions, which resulted in an increase in our hydrocarbons sales prices, as well as the launch of new production facilities in August 2020.
Cash used for capital expenditures
Our cash used for capital expenditures amounted to RR 47.6 billion in the third quarter 2021 and to RR 136.4 billion in the nine months 2021 as compared to RR 39.8 billion and RR 142.3 billion, respectively, in the prior year corresponding periods. A significant portion of our capital expenditures was attributable to the development of our LNG projects, the ongoing development and launch of the fields within the North-Russkiy cluster (the North-Russkoye, East-Tazovskoye, Dorogovskoye and Kharbeyskoye fields), construction of a hydrocracker unit at our Ust-Luga Complex, the development of the Verhnetiuteyskiy and West-Seyakhinskiy license area, crude oil deposits of the East-Tarkosalinskoye and Yarudeyskoye fields, as well as capital spent on exploratory drilling.
Hydrocarbon Production
3Q 2021 | 3Q 2020 | 9M 2021 | 9M 2020 | |
149.5 | 150.4 | Total hydrocarbon production (million boe) | 464.3 | 445.9 |
1.63 | 1.63 | Total production (million boe per day) | 1.70 | 1.63 |
19,001 | 19,131 | Natural gas production includingproportionate share in the production ofjoint ventures (mmcm) | 59,107 | 56,710 |
10,310 | 10,167 | Natural gas production by subsidiaries | 31,918 | 29,508 |
8,691 | 8,964 | Group's proportionate share in the natural gasproduction of joint ventures | 27,189 | 27,202 |
3,010 | 3,023 | Liquids production including proportionateshare in the production of joint ventures (mt) | 9,250 | 8,992 |
1,622 | 1,611 | Liquids production by subsidiaries | 5,022 | 4,665 |
1,388 | 1,412 | Group's proportionate share in the liquidsproduction of joint ventures | 4,228 | 4,327 |
In the third quarter 2021, our total natural gas and liquids production including our proportionate share in the production of joint ventures marginally decreased by 0.7% and 0.4%, respectively. The commissioning of gas condensate deposits within the fields of the North-Russkiy cluster (the North-Russkoye and East-Tazovskoye) in August 2020 almost offset the declines in hydrocarbons production at mature fields of our subsidiaries and joint ventures.
In the nine months 2021, our total natural gas and liquids production increased by 4.2% and 2.9%, respectively, due the launch of new production facilities.
Hydrocarbon Sales Volumes
3Q 2021 | 3Q 2020 | 9M 2021 | 9M 2020 | |
16,574 | 16,563 | Natural gas (mmcm) | 55,706 | 54,149 |
including: | ||||
14,867 | 14,359 | Sales in the Russian Federation | 49,731 | 47,029 |
1,707 | 2,204 | Sales on international markets | 5,975 | 7,120 |
4,014 | 3,771 | Liquids (mt) | 12,227 | 11,940 |
including: | ||||
1,413 | 1,348 | Stable gas condensate refined products | 4,938 | 4,937 |
985 | 1,093 | Crude oil | 3,023 | 3,347 |
863 | 723 | Liquefied petroleum gas | 2,566 | 2,135 |
750 | 603 | Stable gas condensate | 1,689 | 1,508 |
3 | 4 | Other petroleum products | 11 | 13 |
In the third quarter and the nine months 2021, our natural gas sales volumes totaled 16.6 billion and 55.7 billion cubic meters (bcm), representing increases of 0.1% and 2.9%, respectively, as compared to the corresponding periods in 2020, mainly resulting from an increase in natural gas volumes sold on the domestic market due to the launch of additional production facilities, as well as higher demand from end-customers due to weather conditions. This positive effect was offset by a decline in natural gas volumes sold on the international markets due to a decrease in LNG sales volumes purchased primarily from our joint venture OAO Yamal LNG, as a result of an increase in the share of Yamal LNG's direct LNG sales under long-term contracts and the corresponding decrease in LNG spot sales to shareholders, including the Group.
As at 30 September 2021, we recorded 1.8 bcm of natural gas in inventory balances compared to 1.5 bcm at 30 September 2020. Natural gas inventory balances fluctuate period on period and depend on the Group's demand for natural gas withdrawals for the sale in subsequent periods.
In the third quarter and the nine months 2021, our liquid hydrocarbons sales volumes totaled 4.0 million and 12.2 million tons (mt), respectively, representing increases of 6.4% and 2.4%, as compared to the corresponding periods in 2020. The increase was primarily due to gas condensate production growth, as well as changes in inventory balances. As at 30 September 2021, we recorded 912 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 945 mt at 30 September 2020. 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 September 2021 | 31 December 2020 | |
ASSETS | ||
Non-current assets | 1,799,500 | 1,696,244 |
Property, plant and equipment | 836,828 | 729,407 |
Investments in joint ventures | 508,008 | 450,632 |
Long-term loans and receivables | 330,061 | 391,053 |
Current assets | 656,825 | 362,934 |
Total assets | 2,456,325 | 2,059,178 |
LIABILITIES AND EQUITY | ||
Non-current liabilities | 244,503 | 260,755 |
Long-term debt | 153,399 | 168,988 |
Current liabilities | 449,746 | 159,996 |
Total liabilities | 694,249 | 420,751 |
Equity attributable toPAO NOVATEK shareholders
| 1,745,349 | 1,619,964 |
Non-controlling interest | 16,727 | 18,463 |
Total equity | 1,762,076 | 1,638,427 |
Total liabilities and equity | 2,456,325 | 2,059,178 |
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 LNG 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. Upstream activities of the Company's subsidiaries and joint ventures 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».