Slide 1: Third Quarter 2009 Operational and Financial Results Conference Call
Third Quarter 2009 Operational and Financial Results Conference Call Mark A. Gyetvay, Chief Financial Officer and Member of the Board of Directors Moscow Russian Federation Moscow, 17 November 2009
Slide 2: Disclaimer – Forward Looking Statement
Disclaimer – Forward Looking Statement Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which
Slide 3: Summary Results – 3Q 2009
Summary Results – 3Q 2009 Increase in revenues and earnings driven by higher natural gas prices and liquids sales volumes – Natural gas sales increased by 13.3% Y-o-Y and 2.4% Q-o-Q – Liquids sales increased by 3.0% Y-o-Y and decreased by 15.4% Q-o-Q Cash flow from operations p increased by y 55
Slide 4: Operational Overview
Operational Overview nm sae MOVATEK ;
Slide 5: Hydrocarbon Production
Hydrocarbon Production Natural Gas Production, mmcm Liquids Production, mt 719 697 Other Other 7 563 7,563 7,756 7 531 7,531 Other Khanchey Other Other 578 Khanchey Khanchey Khanchey Other Khanchey Khanchey Yurkharov Yurkharov Yurkharov Yurkharov Yurkharov Yurkharov East-Tarko East-Tarko East-Tarko
Slide 6: Purovsky Plant & Vitino Sea Port Terminal
Purovsky Plant & Vitino Sea Port Terminal Total volumes delivered: 693 mt – East-Tarkosalinskoye and Khancheyskoye fields: 331 mt (100% of net production) – Yurkharovskoye field: 352 mt (99% of net production) – Other : 10 mt Total plant output: 687 mt – Stable gas condensate: 498 mt – LPG: 189
Slide 7: Stable Gas Condensate in Transit
Stable Gas Condensate in Transit (South Korea) Yosu (Chi ) (China) Singapore “Goods in transit” “Goods in transit” “Goods in transit” 30.09.2008 30.06.2009 30.09.2009 2 tankers 2 tankers 2 tankers ~ 106 thousand tons ~ 111 thousand tons ~ 117 thousand tons 7
Slide 8: Financial Overview – 3Q 09 vs. 3Q 08
Financial Overview – 3Q 09 vs. 3Q 08 8
Slide 9: Comparison of Quarterly Results (RR million)
Comparison of Quarterly Results (RR million) 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Oil and gas sales 19,437 16,061 16,316 22,376 21,217 Total revenues 20,463 16,581 16,981 23,148 21,971 Operating expenses 11,936 12,135 11,379 15,036 13,638 (1) EBITDA 9 633 9,633 5 822 5,822 6 899 6,899 9 334 9,334 9 660 9,6
Slide 10: Market Distribution – Gas Sales Volumes (mmcm)
Market Distribution – Gas Sales Volumes (mmcm) 8,678 8,563 8,226 7,704 , 7,763 3,841 44.3% 4,016 48.8% 4,596 53.7% 300 3.4% 5,773 5,859 75.5% 74.9% 24 0.3% 0 0.0% 4,186 4 537 4,537 50.9% 52.3% 3,967 46.3% 0 0.0% 0 0.0% 1,931 25.1% 1,904 24.5% 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Ex-field E-trading End-cust
Slide 11: Market Distribution – Liquids Sales Volumes (mt)
Market Distribution – Liquids Sales Volumes (mt) 894 705 707 577 608 776 86.8% 517 73.4% 82.7% 378 65.5% 439 72.2% 585 6 1.0% 7 1.0% 5 0.8% 1 0.1% 2 0.3% 193 33.5% 181 164 25.6% 27.0% 117 13 1% 13.1% 120 17.0% 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Domestic CIS Export • Y-o-Y growth in liquids sales volumes
Slide 12: Total Revenues (RR million)
Total Revenues (RR million) Change due to price Change due to volume Due to a decrease in geological and Total average realized geophysical g p y research prices i increased i d by b 20.0% 20 0% services provided to our associates (1,421) 111 (84) 2,200 (30) 21,971 ,97 20,463 433 (143) (612) (86) (1
Slide 13: Total Revenues Breakdown
Total Revenues Breakdown 3Q08 2% Natural gas 3% 3% 3% 9% Stable condensate 23% 57% LPG Crude oil 3Q09 2% 2% 1% 11% Oil products Polymers 60% 24% Other 13
Slide 14: Realized Hydrocarbon Prices (net of VAT and export duties)
Realized Hydrocarbon Prices (net of VAT and export duties) 3Q 08 3Q 09 +/(-) +/(-)% 2Q 09 3Q 09 +/(-) +/(-)% Domestic prices 1,850 , 2,006 , 156 8.4% Natural gas end end-customers, customers, RR/mcm 1,932 , 2,006 , 74 3.8% 1,382 - (1,382) -100.0% Natural gas e-trading, RR/mcm - - n/a n/a - 1,767 1,7
Slide 15: Operating Expenses (RR million and % of Total Revenues)
Operating Expenses (RR million and % of Total Revenues (TR)) 3Q 08 % of TR 3Q 09 % of TR 2Q 09 % of TR 3Q 09 % of TR 4,565 22.3% 7,190 32.7% Transportation expenses 8,295 35.8% 7,190 32.7% 1,928 9.4% 1,955 8.9% Taxes other than income tax 1,935 8.4% 1,955 8.9% 6,493 6 493 31.7% 31 7% 145 41.6% 9,145
Slide 16: Transportation Expenses (RR million)
Transportation Expenses (RR million) Change due to tariffs/distance Change due to volume Tariff/Dist. = (167) V l Volumes = 239 Tanker = 90 10 32 7,190 879 (22) Export Tariff/Dist. = (165) Volumes = 434 Other includes: • Unallocated rail CIS = (14) services; 4,565 Domestic = (60) • Oil products 1,36
Slide 17: Taxes Other Than Income Tax Expense (RR million)
Taxes Other Than Income Tax Expense (RR million) Change due to tax rate Change due to production - 61 (57) 1 928 1,928 29 - 34 15 5 1 955 1,955 (60) 3Q 08 Natural Gas Crude Property Excise tax Other 3Q 09 gas condensate oil tax UPT tax The decrease in UPT tax by RR 27 million, or 1.6%, was primari
Slide 18: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) 64 54 23 1,642 8 (2) 1,594 (102) (70) (23) Decrease in production of Decrease in geological polymers and insulation tape and geophysical products and the associated research services decrease in purchases of raw provided to our materials associates
Slide 19: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) 1,336 32 6 1,308 17 12 17 (12) (93) (7) Increase due to RR 37 million in Decrease in accrual of arrangement fees which was paid by performance-related bonuses the Group to banks for new credit and a 3.6% decrease in the lines opened in the 2009 period
Slide 20: Financial Overview – 3Q 09 vs. 2Q 09
Financial Overview – 3Q 09 vs. 2Q 09 20
Slide 21: Total Revenues (RR million)
Total Revenues (RR million) Change due to price Change due to volume 209 (85) 23,148 100 736 14 8 8 21,971 - 26 1 (26) (2,168) 2Q 09 Natural Stable gas LPG Crude Oil i Polymers Other 3Q 09 gas condensate oil products revenues 21
Slide 22: Total Revenues Breakdown
Total Revenues Breakdown 2Q09 2%0% 2% 1% Natural gas 7% Stable condensate 32% 56% LPG C d oilil Crude 3Q09 2% 2% 1% 11% Oil p products Polymers 60% 24% Other 22
Slide 23: Transportation Expenses (RR million)
Transportation Expenses (RR million) Change due to tariffs/distance Change due to volume Tariff/Dist. = (66) (471) Volumes = (287) 8,295 Tanker = (342) 85 1 5 7 190 7,190 Export (1) Tariff/Dist. = (36) Other includes: Volumes = (18) • Unallocated rail CIS = (1) services; se ces; Domestic = 26 • Oil
Slide 24: Taxes Other Than Income Tax Expense (RR million)
Taxes Other Than Income Tax Expense (RR million) Change due to tax rate Change due to production 28 20 1,955 1,935 - 25 (3) - (49) (1) 2Q 09 Natural Gas Crude Property Excise tax Other 3Q 09 gas condensate oil tax UPT tax The increase in UPT tax by RR 45 million, or 2.8%, was primarily due to an i
Slide 25: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) 99 3 19 1,594 1,469 24 1 (10) (4) (7) Increase in production of polymers and insulation tape products and the associated increase in purchases of raw materials 2Q 09 P Payroll ll Materials M t i l & Processing P i R Repair i & Electricity El t i it
Slide 26: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) 54 39 32 1 308 1,308 1,281 8 (16) (42) (19) (29) 2Q 09 Payroll Social and Legal, audit & Business Bank Rent Concession Other 3Q 09 charitable consulting trip charges services 26
Slide 27: Appendices
Appendices nm sae MOVATEK n
Slide 28: Natural Gas Sales Volume Mix
Natural Gas Sales Volume Mix 100% 75% 50% 25% 0% 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Ex-field End-customers (incl. traders in remote points & e-trading) 28
Slide 29: Increasing Natural Gas Production (mmcm per day)
Increasing Natural Gas Production (mmcm per day) 100 80 60 40 20 0 Sep Sep Sep Oct Oct Oct Jan Aug Jan Aug Jan Aug Apr Nov Apr Nov Apr Nov Dec Dec Dec Mar Mar Mar May May May Jul Jul Jul Feb Feb Feb Jun Jun Jun 2006 2007 2008 2009 2006 Avg. 2007 Avg. 2008 Avg. 3Q 09 Avg. 79 mmcm/day 78 mmcm/day 84 m
Slide 30: Condensed Balance Sheet (RR million)
Condensed Balance Sheet (RR million) 30 September 2009 31 December 2008 +/(-) +/(-)% Total current assets 18,130 25,428 (7,298) -28.7% Incl. Cash and cash equivalents 3,111 10,992 (7,881) -71.7% Total non-current assets 165,073 113,578 51,495 45.3% Incl. Net PP&E 159,789 108,714 51,075 47.0% Assets
Slide 31: Total Debt Maturity Profile (RR million)
Total Debt Maturity Profile (RR million) 20,000 17,986 16 044 16,044 9 In October 2009 we fully repaid a RR 1,505 million of 15,000 short-term loan from CALYON RUSBANK; 9 In November 2009 the Group fully repaid RR 2,887 million of 10,000 current portion of LT debt from 13,756 Gazprombank; 9 RR 13,08
Slide 32: Profit Attributable to NOVATEK Shareholders (RR million)
Profit Attributable to NOVATEK Shareholders (RR million) 950 1,508 1,879 11 80 7,353 ((141)) 5,682 36 (2,625) (27) 3Q 08 Total OPEX Transport Taxes other Other Finance Share of Income tax Non-controlling 3Q 09 revenues controllable than income income income profit (loss) of expense interest expenses
Slide 33: Profit Attributable to NOVATEK Shareholders (RR million)
Profit Attributable to NOVATEK Shareholders (RR million) 1,105 183 83 61 7,353 7,178 (20) (200) (34) (58) 315 (1,177) 2Q 09 Total OPEX Transport Taxes other Other Finance Share of Income tax Non-controlling 3Q 09 revenues controllable than income income income profit (loss) of expense interest expen
Slide 34: Questions and Answers
Questions and Answers a= sae MOVATEK u