On April 25, 2018, Novatek released its consolidated interim condensed financial statements for the three months that ended on March 31, 2018 prepared in accordance with International Financial Reporting Standards (IFRS).

In the first quarter of 2018, the company’s total revenues amounted to RUB179.4 billion and its normalized EBITDA, including the company’s share in the EBITDA of the joint ventures, totaled RUB76.3 billion. These figures represented year-on-year increases of 16.0 percent and 11.9 percent, respectively. The increases in the company’s total revenues and the normalized EBITDA were largely due to the launch of production at the first LNG train at Yamal LNG at the end of 2017 and an increase in the average realized liquids and natural gas prices.

Novatek’s profits in both reporting periods were significantly impacted by the recognition of substantial non-cash foreign exchange effects on foreign-currency-denominated loans held by the group and its joint ventures. As a result, the profit to be allocated to Novatek’s shareholders decreased to RUB43.1 billion (RUB14.30 per share), or by 39.3 percent, as compared to the corresponding period in 2017. Excluding the effect of foreign exchange differences, as well as the one-time effect from the disposal of interests in some joint ventures, the normalized profit to be allocated to Novatek’s shareholders increased to RUB46.9 billion (RUB15.56 per share), or by 5.8 percent, against the figures registered in the corresponding period of 2017.

The company’s operational results for the first quarter of 2018 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, namely the Beregovoye, the West-Yaroyakhinskoye, and the Syskonsyninskoye fields. As a result, the company’s total natural gas production increased by 2.2 percent, and the company’s total liquids production declined marginally by one percent.

The company’s natural gas sales volumes totaled 20.3 billion cubic meters (bcm), representing an 8.1-percent increase as compared to the corresponding period in 2017. The rise came as a result of LNG sale commencement from the company’s joint venture Yamal LNG to international markets, as well as an increase in the volumes sold inside of Russia. As of the end of the first quarter of 2018, the company’s cumulative natural gas inventory balances mainly in the underground gas storage facilities, the gas transmission system, and Novatek’s own pipeline infrastructure totaled 79 million metric cubic meters (mmcm). The figure declined by 954 mmcm during the quarter. The decrease stood at 704 mmcm in relation to the corresponding period of 2017.

The company’s liquid hydrocarbon sales volumes stood at 3.8 million tons, representing an 8.2-percent decrease against the figure for the corresponding period of 2017. The decrease in the company’s liquids sales volumes was mainly impacted by an increase in liquids inventories by 140 million tons (mt) in the first quarter of 2018 compared to a decrease by 90 mt in the first quarter of 2017. As of March 31, 2018, Novatek recorded 1,102 mt of liquid hydrocarbons in transit or storage, recognizing it as inventory, as compared to 813 mt registered on March 31, 2017. The company’s liquid hydrocarbon inventory balances tend to fluctuate period-on-period and are usually realized during the subsequent reporting period.