Novatek Swings to Loss in Q1 on Forex
Russia's premier LNG exporter Novatek swung to a net loss of rubles 30.7bn ($417mn) in the first quarter as a result of foreign exchange losses, it reported on April 29, from a rubles 381.8bn gain a year earlier.
The ruble devalued sharply in March with the collapse in oil prices and this inflated Novatek's foreign-denominated debts in ruble terms. Excluding the forex effect, Novatek posted a net profit of rubles 53.55bn for the three-month period, down 18.5% yr/yr. Novatek has also approved a 24% hike in dividends this year to rubles 32.33/share.
Novatek's core earnings (Ebitda) were down 14.7% at rubles 100.7bn, on the back of a 22% decline in revenues to rubles 184.6bn. Like other gas suppliers, Novatek was stung by low prices and weaker demand caused by Covid-19 shutdowns. Novatek's overseas gas sales were down 28.4% yr/yr in the first quarter at 2.45bn m3.
The company lifted 19.1bn m3 of gas in the three-month period, up 2.2% yr/yr.
Novatek said in February it estimated its capital expenditure in 2020 at around rubles 250bn, of which 60% will be spent on Arctic LNG-2 and other new LNG projects.
"We conduct regular reviews of our capital expenditure programme and existing debt obligations," the company's management said in a report. "In our opinion, the group's financial position is stable and expected operating cash flows are sufficient to service and repay our debt, as well as to execute our planned capital expenditure programmes."
Other Russian producers are likely to also incur losses as a result of the ruble's devaluation. Rosneft, the country's biggest oil company, is not due to publish its first-quarter results until next month. But BP has said it booked a $218mn loss on its 19.75% stake in the Russian company in the three months, compared with a $526mn profit a year earlier, because of "unfavourable foreign exchange and duty lag effects." This would suggest that Rosneft suffered a $1.1bn loss, although BP cautioned that the Russian firm's actual results might differ.
Results from Gazprom and Lukoil are also expected in May. The former just released its numbers for the fourth quarter. While full-year net profits were down only 17% at rubles 1.2 trillion, NGW calculates that its fourth-quarter income slumped around 60% yr/yr to rubles 154.6bn.
Many Russian producers also booked losses after revising their debts to account for the ruble's weakness after the 2014 oil price crash.