OilVoice - NOVATEK Announces Full Year 2009 Results

NOVATEK Announces Full Year 2009 Results

Saturday, March 13, 2010

OAO NOVATEK has released its audited consolidated financial statements for the years ended 31 December 2009 and 2008 prepared in accordance with International Financial Reporting Standards ('IFRS').

Total revenues grew by 13.5% year-on-year to RR 89,954 million for the twelve months ended 31 December 2009 from RR 79,272 million in the corresponding period of 2008, reflecting the general strength and resiliency of our core business operations despite the difficult economic operating environment. The increase in oil and gas sales was attributable to higher domestic natural gas prices and an increase in liquid hydrocarbon volumes sold.

As a result of the higher revenues and our ability to decrease controllable costs, profit attributable to NOVATEK shareholders increased by 13.7% to RR 26,043 million, or RR 8.59 per share as compared to RR 22,899 million, or RR 7.54 per share for the corresponding period in 2008.

Production
In 2009, total consolidated natural gas production increased by 1,923 mmcm, or 6.3%, compared to 2008 due to increased production capacity at the Yurkharovskoye field resulting from the launch of the first two stages of the field's second phase of development in September 2008 and October 2009, respectively. The increase in production capacity allowed NOVATEK to decrease 2009 natural gas purchases by 1,885 mmcm, or 65.3%, as compared to 2008. The decrease in total 2009 natural gas sales volumes of 337 mmcm, or 1%, as compared to 2008 was mainly due to an increase in the company's inventory balance at underground storage facilities in 2009.

Liquids production increased by 475 thousand tons, or 18.5%, to 3,038 thousand tons compared to 2,563 thousand tons in 2008, due to the expansion of unstable gas condensate production capacity at the company's Yurkharovskoye field as a result of the field's ongoing development program. The increase in 2009 unstable gas condensate production, as well as a decrease in liquids inventory balances, allowed NOVATEK to increase stable gas condensate and LPG sales volumes by 37.1% and 21.2%, respectively, compared to 2008.

At 31 December 2009, NOVATEK had 111 thousand tons of stable gas condensate in transit or storage and recognized as inventory until such time as it is delivered to customers as compared to 220 thousand tons as of 31 December 2008. In 2009, the company's stable gas condensate in transit or storage and recognized as inventory decreased by 109 thousand tons compared to a decrease of four thousand tons in 2008.

Reserves
DeGolyer and MacNaughton, an independent petroleum engineering consulting firm, has appraised the reserves at NOVATEK's three core fields - Yurkharovskoye, East Tarkosalinskoye and Khancheyskoye - and estimates that as of 31 December 2009 these fields had proved reserves of 6.85 billion boe, including 967 bcm of natural gas.

In 2009 the Board of Directors of OAO NOVATEK approved the acquisition of a 51% equity stake in OAO Yamal LNG holding the license for exploration and development of the South-Tambeyskoye field. The South-Tambeyskoye field was initially discovered in 1974, the field is located in the north-east of the Yamal Peninsula. As of 1 January 2008, the field's natural gas reserves in accordance with the Russian reserve classification (categories C1 + C2) amount to 1.256 tcm.

In October 2009, the Company launched the second stage of Phase Two development at the Yurkharovskoye field, providing the Company with the potential to increase annual productive capacity at the field by seven billion cubic meters (bcm) of natural gas and approximately 600 thousand tons of unstable gas condensate. As part of the second stage development, the Company launched two additional processing trains for separating natural gas, enabling the field to reach annual natural gas and gas condensate production volumes of 23 bcm and two million tons, respectively. With the launch of the second stage, NOVATEK has the productive capacity to produce up to 44 bcm of natural gas per annum.

In 2009, gross production for NOVATEK totaled 240 mmboe (approximately 658 thousand boe per day) consisting of 32.78 billion cubic meters of natural gas and 3,049 thousand tons of liquids. Natural gas production increased by 1.89 billion cubic meters, or by 6.2%, whereas gross liquids production increased by 463 thousand tons, or by 17.9%, as compared with the corresponding gross production in 2008.

NOVATEK's impressive growth has been achieved through the successful strategy of developing and exploiting their significant hydrocarbon resource base, while maintaining their low-cost competitive advantage.