Russia: Novatek Q1 Net Profit Rises 69 Percent

OAO NOVATEK today released its consolidated interim condensed financial information as of and for the three months ended 31 March 2011 prepared in accordance with International Financial Reporting Standards (IFRS).

In the first quarter 2011, NOVATEK total revenues increased by 61.7% to RR 44,861 million compared to RR 27,742 million in the corresponding period of 2010, primarily due to an increase in natural gas, stable gas condensate and LPG sales volumes and prices.

NOVATEK recorded an increase of 68.6% in profit attributable to NOVATEK shareholders, which amounted to RR 18,853 million or RR 6.22 per share, as compared to the corresponding period in 2010 that was primarily due to higher oil and gas sales, cost optimization resulting from the completion of infrastructure projects and foreign exchange gains.

According to NOVATEK’s Chief Financial Officer, Mark Gyetvay, “Our first quarter 2011 results reflect the successful integration of our recent acquisitions into the Company’s operations, the strong domestic and international pricing environment as well as the measures we have taken to optimize costs throughout the hydrocarbon production and processing cycles.”

Sales volumes of natural gas increased in the first quarter 2011 due to an increase in NOVATEK’s production capacity and natural gas purchases, the expansion of our customer portfolio and higher natural gas demand in the domestic market. NOVATEK continued to demonstrate strong organic production growth at the Yurkharovskoye field and initiated natural gas purchases in proportion to our equity share in Sibneftegas’ production.

Total liquids sales volumes increased in the 2011 period due to higher production volumes, driven primarily by organic production growth at the Yurkharovskoye field, and an increase in the realization of stable gas condensate volumes previously recognized as goods in transit or storage at the beginning of the reporting period, compared to the first quarter 2010.

At 31 March 2011, NOVATEK recorded 282 thousand tons of stable gas condensate in transit or storage and recognized as inventory until such time as it is delivered to the port of destination as compared to 264 thousand tons as at 31 December 2010.

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Source: NOVATEK, May 13, 2011;