Company Announcements

Half-year Report

Source: RNS
RNS Number : 5866G
PAO Novatek
24 July 2019
 

 

 

FOR IMMEDIATE RELEASE

 

NOVATEK Announces Consolidated IFRS Results
for 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 to
shareholders 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 

Other petroleum products

 

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 to
PAO 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 2207
press@novatek.ru

Investor Relations
+7 (495) 730 6013
IR@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».


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