Moscow, 26 July 2017. PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and six months ended 30 June 2017 prepared in accordance with International Financial Reporting Standards (“IFRS”).

IFRS Financial Highlights
(in millions of Russian roubles)
2Q
2017
2Q
2016
 
1H
2017
1H
2016
128,030
126,463
Oil and gas sales
282,031
264,674
800
925
Other revenues
1,427
2,065
128,830
127,388
Total revenues
283,458
266,739
(94,033)
(90,019)
Operating expenses
(203,397)
(187,178)
Net gain on disposal of interests in joint ventures
73,072
351
(1,731)
Other operating income (loss)
625
(760)
35,148
35,638
Profit from operations
80,686
151,873
43,798
46,276
Normalized EBITDA of subsidiaries*
97,613
97,099
56,072
59,507
Normalized EBITDA including share in EBITDA of joint ventures*
124,252
121,643
13,414
74
Finance income (expense)
4,812
990
(33,768)
19,623
Share of profit (loss) of joint ventures,
net of income tax
9,858
43,004
14,794
55,335
Profit before income tax
95,356
195,867
3,243
45,934
Profit attributable
to PAO NOVATEK shareholders
74,261
161,851
33,772
29,610
Normalized profit attributable
to PAO NOVATEK shareholders**
78,117
66,509
11.20
9.81
Normalized basic and diluted earnings per share** (in Russian roubles)
25.89
22.03
* 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 and first half 2017, our total revenues increased by 1.1% and 6.3%, respectively, compared to the corresponding periods of 2016. Our Normalized EBITDA, inclusive of joint ventures, amounted to RR 56.1 billion in the second quarter 2017 and RR 124.3 billion in the first half 2017, representing a decrease of 5.8% and an increase of 2.1%, respectively, as compared to the corresponding periods of 2016. The growth in our revenues and EBITDA in the first half 2017 was largely driven by the increase in natural gas sales volumes and higher liquids sales prices. Our EBITDA in the second quarter 2017 was significantly affected by lower average realized prices in Russian rouble terms for most of our liquid hydrocarbon products as well as the decrease in liquid hydrocarbons sales volumes.

In the second quarter and first half 2017, profit attributable to NOVATEK shareholders decreased to RR 3.2 billion (RR 1.08 per share), or by 92.9%, and to RR 74.3 billion (RR 24.62 per share) or by 54.1%, as compared to the corresponding periods of 2016. Profit dynamics was mainly impacted by the closing in the first quarter 2016 of a transaction for the sale of a 9.9% equity stake in Yamal LNG and by the foreign exchange effect (including at the joint ventures level). Excluding these effects, normalized profit attributable to NOVATEK shareholders totalled RR 33.8 billion (RR 11.20 per share) in the second quarter 2017 and RR 78.1 billion (RR 25.89 per share) in the first half 2017, representing an increase by 14.1% and 17.5%, respectively, as compared to the corresponding periods of 2016.

Marketable Hydrocarbon Production and Purchased Volumes
2Q
2017
2Q
2016
1H
2017
1H
2016
124.6
134.1
Total hydrocarbon production, million barrels of oil equivalent (boe)
252.3
273.6
1.37
1.47
Total production, million boe per day
1.39
1.50
15,323
16,521
Natural gas production including proportionate share in the production of joint ventures, million cubic meters (mmcm)
31,044
33,757
10,600
11,602
including production by subsidiaries, mmcm
21,521
23,778
2,356
1,840
Natural gas purchases from joint ventures, mmcm
7,657
4,589
1,936
1,939
Other purchases of natural gas, mmcm
3,796
3,950
14,892
15,381
Total natural gas production by subsidiaries and purchases, mmcm
32,974
32,317
2,918
3,119
Liquids production including proportionate share in the production of joint ventures,
thousand tons (mt)
5,885
6,327
1,687
1,809
including production by subsidiaries, mt
3,400
3,664
2,296
2,450
Liquids purchases from joint ventures, mt
4,639
4,981
41
13
Other purchases of liquids, mt
78
44
4,024
4,272
Total liquids production by subsidiaries and purchases, mt
8,117
8,689
 
Hydrocarbon Sales Volumes
2Q
2017
2Q
2016
1H
2017
1H
2016
14,380
14,062
Natural gas, mmcm
33,132
31,837
13,780
13,045
including sales to end-users
31,109
29,139
4,072
4,139
Liquids, mt
8,185
8,781
including:
 
 
1,763
1,684
Stable gas condensate products
3,600
3,565
1,211
1,157
Crude oil
2,283
2,345
645
656
Liquefied petroleum gas
1,322
1,359
450
639
Stable gas condensate
974
1,507
3
3
Other petroleum products
6
5

Our natural gas sales volumes totalled 14.4 billion cubic meters (bcm) in the second quarter 2017 and 33.1 bcm in the first half 2017. Compared to the second quarter and first half 2016 the sales volumes increased by 2.3% and 4.1%, respectively, due to the increased demand for natural gas from end-customers resulted, among other factors, from weather conditions. As at the end of the first half 2017, the total amount of natural gas recorded as inventory totalled 0.6 bcm compared to 1.7 bcm as at the end of the first half 2016.

In the second quarter 2017, liquid hydrocarbon sales volumes amounted to 4.1 million tons, representing a 1.6% decrease in volumes sold as compared to the second quarter 2016. In the first half 2017, liquid hydrocarbon sales volumes totaled 8,2 million tons, representing a 6.8% decrease as compared to the first half 2016. The decrease was due to a natural decline in gas condensate production volumes at mature fields of our subsidiaries and joint ventures. As at 30 June 2017, 699 mt of liquid hydrocarbons were in transit or storage and recognized as inventory.

Selected Items of Consolidated Statement of Financial Position
(in millions of Russian roubles) 
  
 
30
June
2017
31
December
2016
ASSETS
 
 
Non-current assets
840,385
831,074
Property, plant and equipment
334,318
331,795
Investments in joint ventures
269,220
259,650
Long-term loans and receivables
206,298
209,145
Total current assets
134,117
132,760
Total assets
974,502
963,834
LIABILITIES AND EQUITY
 
Non-current liabilities
184,162
197,323
Long-term debt
144,404
161,296
Current liabilities
77,962
108,791
Total liabilities
262,124
306,114
Equity attributable to PAO NOVATEK shareholders 
698,819
648,350
Non-controlling interest
13,559
9,370
Total equity
712,378
657,720
Total liabilities and equity
974,502
963,834
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).

PAO NOVATEK is one of the largest independent natural gas producers in Russia. 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 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 16% 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».