Novatek Increases Revenue by 63% in 1Q
Novatek released its consolidated interim condensed financial information for the three months ended March 31, 2010 prepared in accordance with International Financial Reporting Standards.
IFRS Financial and Operational Highlights
In the first quarter 2010, our total revenues increased by 63.4% to RR 27,742 million compared to RR 16,981 million in the corresponding period of 2009, primarily due to an increase in natural gas, stable gas condensate and LPG sales volumes and prices.
We recorded a more than five-fold increase in profit attributable to NOVATEK shareholders, which amounted to RR 11,182 million, or RR 3.69 per share, as compared to the corresponding period in 2009, and was primarily due to higher revenues and a net gain on disposal of our interest in ZAO Terneftegas, which was comprised of a non cash RR 807 million revaluation of NOVATEK's remaining 51% interest in the asset and RR 776 million in net consideration for the disposal of our 49% interest. The Company also realized a non-cash foreign exchange gain during the period of RR 646 million compared to a non-cash foreign exchange loss of RR 3,025 million in the 2009 period.
According to NOVATEK's Chief Financial Officer, Mark Gyetvay, "The continuation of our strong earnings momentum in the first quarter 2010 was primarily due to the recovery of domestic demand, seasonality factors and rising commodity prices."
Sales volumes of natural gas increased in the first quarter 2010 due to an increase in NOVATEK's production capacity and higher natural gas demand in the domestic market. We continued to demonstrate strong organic production growth at the Yurkharovskoye field resulting from the launch of the second stage of phase two development in October 2009 as well as an increase in natural gas production from the East-Tarkosalinskoye and Khancheyskoye fields, due to the normalization of production from these fields to meet demand.
Total liquids sales volumes increased in the 2010 period due to higher production volumes driven primarily by the organic production growth at the Yurkharovskoye field as well as increased production from the Khancheyskoye field. The higher production volumes in the first quarter 2010 were offset by an increase in our stable gas condensate inventory balance. At March 31, 2010, we recorded 277 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 111 thousand tons as at December 31, 2009.
"The growth in our core operating results in the first quarter of 2010 was the result of our strategic efforts to eliminate production constraints," stated Leonid V. Mikhelson, CEO NOVATEK. "Our investments in new production capacity allowed us to supply the necessary natural gas volumes to meet increased domestic demand and capitalize on the higher pricing environment."