Novatek Boosted by Yamal LNG, Loses on Forex

Russian gas producer Novatek reported July 25 a second quarter 2018 profit of rubles 32.04bn ($510mn), almost ten times more than in Q2 2017.

This year's profit would have been much greater but for “non-cash foreign exchange effects on foreign currency denominated loans and its joint ventures.” Excluding these effects and the one-time effect from the disposal of interests in joint ventures, normalised profit attributable to shareholders was rubles 54.3bn, an increase of 60.8% on a like-for-like basis.

Total revenues from oil and gas sales were rubles 196bn, up rubles 67bn on Q2 2018; but operating expenses rose by rubles 42bn.

The increase in total revenue and normalised earnings were largely due to the production launch of the first LNG train at Yamal LNG at the end of 2017, as well as an increase in average realized liquids and natural gas prices, it said. Last week Novatek CEO Leonid Mikhelson told TASS news agency that Yamal train 2 would launch early August and train 3 by early 2019. 

Novatek reported its Q2 gas sales volumes totaled 15.1bn m³, up 5.3% year on year thanks to the sale of LNG purchased from its operated Yamal LNG to international markets from December 2017 and an increase in volumes sold in the Russian Federation.

Operational results for the quarter were significantly impacted by the production launch of the first LNG train at Yamal LNG at the end of 2017, as well as the acquisitions of new producing fields at the end of 2017 and in the first quarter of 2018: Beregovoye, West Yaroyakhinskoye and Syskonsyninskoye. Total natural gas production for the second quarter rose by 4.2% while total liquids production was almost the same as last year, being up by 0.3%.