Novatek Announces Third Quarter and Nine Months 2011 IFRS Results

OREANDA-NEWS. November 16, 2011. NOVATEK today released its consolidated interim condensed financial information for the three and nine months ending 30 September 2011 prepared in accordance with International Financial Reporting Standards (“IFRS”).

IFRS Financial and Operational Highlights

(in millions of Russian roubles)

In the third quarter 2011, our total revenues increased by 35.8% to RR 39,980 million compared to the corresponding period in 2010, primarily due to an increase in natural gas sales volumes and higher natural gas and liquids prices. The increase in oil and gas sales in the third quarter 2011 resulted in a 42.7% increase in profit from operations to RR 17,130 million compared to RR 12,008 in the 2010 period. The depreciation of the Russian rouble against the US dollar during the third quarter 2011 resulted in a foreign exchange loss of RR 6,315 million and a 16.8% decrease in profit attributable to OAO NOVATEK shareholders to RR 8,406 million, or RR 2.77 per share, as compared to the corresponding period in 2010. Adjusted profit attributable to OAO NOVATEK shareholders1 in the third quarter 2011 amounted to RR 14,721 million, or RR 4.85 per share, compared to RR 9,534 million, or RR 3.14 per share in the 2010 period.

In the nine months ended 30 September 2011, our total revenues increased by 51.3% to RR 125,417 million, as compared to the corresponding period in 2010, primarily due to an increase in hydrocarbon sales volumes and prices. The increase in oil and gas revenues resulted in a 46.6% increase in profit attributable to OAO NOVATEK shareholders to RR 41,680 million, or RR 13.74 per share over the same period.

Selected Operating Highlights

In the third quarter and nine months of 2011, our natural gas sales volumes increased by 51.0% and 45.7%, respectively, primarily due to an increase in production volumes from subsidiary and associated companies. Over the same periods, our liquids sales volumes decreased by 4.1% and increased by 19.6%, respectively. The decrease in the liquids sales volumes in the third quarter 2011 was primarily due to an increase in the inventory balance of stable gas condensate in storage or transit, whereas our nine month 2011 sales volumes were higher due to an increase in production.

At 30 September 2011, we had 325 thousand tons of stable gas condensate in transit and storage as compared to 206 thousand tons as of 30 September 2010. Our natural gas inventory balance as of 30 September 2011 increased to 1,225 million cubic meters compared to 1,058 million cubic meters at the end of the third quarter of 2010.

Selected Balance Sheet Items

(in millions of Russian roubles)