Profit attributable to NOVATEK shareholders amounted to RR 67.8 billion
PAO NOVATEK today released its audited consolidated financial statements for the year ended 31 December 2020 prepared in accordance with International Financial Reporting Standards (“IFRS”). According to it, profit attributable to NOVATEK shareholders amounted to RR 67.8 billion (RR 22.58 per share) as compared to RR 865.5 billion in 2019.
Excluding the effects from the disposal of interests in subsidiaries and joint ventures, as well as foreign exchange differences, Normalized profit attributable to shareholders of PAO NOVATEK amounted to RR 169.0 billion (RR 56.26 per share), representing a decrease of 31.0% as compared to 2019.
The spread of the COVID-19 virus in 2020 and the mandated shutdowns by many governments have caused financial and economic stress to the global markets. This negative economic impact lowered demand for crude oil, natural gas and oil products, which combined with the increase in the supply of crude oil due to the cancellation of the OPEC+ production agreement in the first quarter 2020, resulted in a decline in global hydrocarbon commodity prices.
Global economic activity began a gradual recovery during the second quarter following the partial removals of restrictions aimed at preventing the epidemic virus spread, as well as a partial recovery in benchmark crude oil prices following the new OPEC+ production agreement reached and the compliance to the target cuts. This economic and commodity price recovery continued throughout the second half of 2020 and was notable on our sequential quarter-on-quarter financial results. Nevertheless, crude oil benchmark prices are still lower than their pre-crisis levels.
In 2020, the company’s total revenues and Normalized EBITDA, including the share in the EBITDA of joint ventures, amounted to RR 711.8 billion and RR 392.0 billion, respectively, representing decreases of 17.5% and 15.0%, as compared to 2019.
“The decreases in total revenues and Normalized EBITDA were largely due to a decline in global commodity prices for hydrocarbons. Our revenues also decreased due to a decrease in LNG sales volumes on international markets resulted from an increase in the share of our joint venture OAO Yamal LNG direct sales under long-term contracts.
The Group’s financial results in 2020 were significantly impacted by the unfavorable macroeconomic conditions noted above, which resulted in a decrease in our hydrocarbons sales prices and a recognition of substantial foreign exchange effects. Moreover, in both years, we recorded effects from the disposal of interests in the Arctic LNG 2 project by recognizing a gain of RR 675.0 billion from the disposal of a 40% participation interest in the Arctic LNG 2 project in 2019, and recognizing in 2019 and 2020 losses in the amount of RR 34.5 billion and RR 47.8 billion, respectively, related to the subsequent non-cash revaluation of contingent consideration on these sales. In 2019, we also recognized a gain from the reorganization of our joint venture AO Arcticgas in the amount of RR 7.8 billion.
Our cash used for capital expenditures aggregated RR 204.6 billion as compared to RR 162.5 billion in 2019. A significant portion of our capital expenditures was attributable to the ongoing development of our LNG projects (the Arctic LNG 2 project prior to March 2019, the LNG construction center located in the Murmansk region and the Obskiy LNG project). In addition, we invested capital in the development and launch of the fields within the North-Russkiy cluster (the North-Russkoye, the East-Tazovskoye and the Dorogovskoye fields), the development of our producing fields (the Beregovoye, the Yurkharovskoye, the West-Yurkharovskoye and others), the development of crude oil deposits of the East-Tarkosalinskoye and Yarudeyskoye fields, and capital spent on exploratory drilling.
Our total natural gas production including our proportionate share in the production of joint ventures increased by 3.6% as compared to 2019.
Our total liquids production including our proportionate share in the production of joint ventures increased by 0.7% compared to 2019 mainly due to an increase in the production at Arcticgas and the commencement of gas condensate extraction at the North-Russkiy cluster (see above), which completely offsets declines in production at mature fields of our subsidiaries and joint ventures, and allows to maintain full capacity utilization at our processing facilities in the long term”, says the company’s statement.
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. 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”.
