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Novatek announces 3Q financial results under IFRS

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

IFRS Financial Highlights 
(in millions of Russian roubles except as stated)
3Q18
3Q17
 
9M18
9M17
217,934
129,970
Oil and gas sales
591,237
412,001
1,432
733
Other revenues
3,354
2,160
219,366 
130,703 
Total revenues
594,591 
414,161 
(156,903)
(94,385)
Operating expenses
(423,546)
(297,782)
Net gain on disposal of
interests in joint ventures
1,645
(485)
(222)
Other operating income (loss)
(1,004)
403
61,978 
36,096 
Profit from operations*
170,041 
116,782 
70,744 
45,094 
Normalized EBITDA of subsidiaries*
196,123 
142,707 
118,091 
59,270 
Normalized EBITDA including share in EBITDA of joint ventures*
295,736 
183,522 
14,560
5,061
Finance income (expense)
27,342
9,873
(11,942)
6,875
Share of profit (loss) of joint ventures,
net of income tax
(28,994)
16,733
64,596
48,032
Profit before income tax
170,034
143,388
45,900 
37,737 
Profit attributable to
shareholders of PAO NOVATEK
121,062 
111,998 
65,522 
34,905 
Normalized profit attributable to
shareholders of PAO NOVATEK **
166,721 
113,022 
21.75
11.57
Normalized basic and diluted earnings per share** (in Russian roubles)
55.31
37.47
* 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 third quarter of 2018, our total revenues amounted to RR 219.4 billion and Normalized EBITDA, including our share in EBITDA of joint ventures, totalled RR 118.1 billion, representing increases of 67.8% and 99.2%, 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 nine months ended 30 September 2018 amounted to RR 594.6 billion and RR 295.7 billion, representing increases of 43.6% and 61.1%, respectively, as compared to the prior year reporting period. The increases in our total revenues and Normalized EBITDA were largely due to the production launches of the first and the second LNG trains at Yamal LNG at the end of 2017 and in July 2018, respectively, as well as a favourable macro-economic environment with increases in average realized liquids and natural gas prices.

In the third quarter and the nine months of 2018, profit attributable to shareholders of PAO NOVATEK increased to RR 45.9 billion (RR 15.23 per share), or by 21.6%, and to RR 121.1 billion (RR 40.17 per share), or by 8.1%, 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 65.5 billion (RR 21.75 per share) in the third quarter of 2018 and RR 166.7 billion (RR 55.31 per share) in the nine months of 2018, representing increases of 87.7% and 47.5%, respectively, as compared to the corresponding periods in 2017.

 
Hydrocarbon Production and Purchased Volumes 
3Q18
3Q17
 
9M18
9M17
138.0 
125.3 
Total hydrocarbon production,
million barrels of oil equivalent (million boe)
402.2 
383.3 
1.50
1.36
Total production (million boe per day)
1.47
1.40
17,386 
15,434 
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
50,312 
47,346 
10,524
10,495
Natural gas production by subsidiaries
31,449
32,706
4,133
2,165
Natural gas purchases from joint ventures
16,140
9,822
2,439
2,407
Other purchases of natural gas
5,876
6,203
17,096 
15,067 
Total natural gas production by subsidiaries and purchases (mmcm)
53,465 
48,731 
2,911 
2,921 
Liquids production including proportionate share in the production of joint ventures,
thousand tons (mt)
8,775 
8,806 
1,631
1,683
Liquids production by subsidiaries
4,909
5,083
2,220
2,312
Liquids purchases from joint ventures
6,842
6,951
178
53
Other purchases of liquids
278
131
4,029 
4,048 
Total liquids production by subsidiaries
and purchases (mt)
12,029 
12,165 
 
Hydrocarbon Sales Volumes
3Q18
3Q17
 
9M18
9M17
15,589 
13,888 
Natural gas (mmcm)
51,001 
47,020 
including:
13,766
13,888
Sales in the Russian Federation
47,567
47,020
1,823
Sales on international markets
3,434
3,934 
3,720 
Liquids (mt)
11,984 
11,905 
including:
1,552
1,477
Stable gas condensate refined products
5,146
5,077
1,134
1,108
Crude oil
3,405
3,391
679
656
Liquefied petroleum gas
1,986
1,978
566
475
Stable gas condensate
1,438
1,449
3
4
Other petroleum products
9
10

Our operational results for the third quarter and the nine months of 2018 were significantly impacted by the production launches of the first and the second LNG trains at Yamal LNG at the end of 2017 and in July 2018, respectively, 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 third quarter and the nine months of 2018 increased by 12.6% and 6.3%, respectively, and our total liquids production decreased marginally by 0.3% and 0.4%, respectively.

In the third quarter and the nine months of 2018, our natural gas sales volumes totaled 15.6 billion and 51.0 billion cubic meters (bcm), representing increases of 12.2% and 8.5%, respectively, as compared to the corresponding periods in 2017. The increases were primarily due to sales of LNG purchased from our joint venture Yamal LNG to international markets. As at the end of the third quarter of 2018, we recorded 2.4 bcm of natural gas in inventory balances relating mainly to natural gas in the Underground Gas Storage Facilities and LNG in transit, compared to 1.4 bcm at the end of the third quarter of 2017.

In the third quarter and the nine months of 2018, our liquid hydrocarbons sales volumes amounted to 3.9 million and 12.0 million tons, representing increases of 5.8% and 0.7%, respectively, as compared to the corresponding periods in 2017, mainly due to changes in inventory balances. As at 30 September 2018, we recorded 850 mt of liquid hydrocarbons in transit or storage and recognized as inventory as compared to 969 mt at 30 September 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 Septembe 2018
31 December 2017
ASSETS
 
 
Non-current assets
933,138
890,726
Property, plant and equipment
384,551
360,051
Investments in joint ventures
253,949
285,326
Long-term loans and receivables
254,640
211,901
Current assets
265,860
153,436
Total assets
1,198,998
1,044,162
LIABILITIES AND EQUITY
 
 
Non-current liabilities
214,870
184,545
Long-term debt
162,496
141,448
Current liabilities
139,949
83,958
Total liabilities
354,819
268,503
Equity attributable to
PAO NOVATEK shareholders
 
824,380
757,839
Non-controlling interest
19,799
17,820
Total equity
844,179
775,659
Total liabilities and equity
1,198,998
1,044,162
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