Slide 1: Third Quarter 2012 Operational and Financial Results Conference Call
Third Quarter 2012 Operational and Financial Results Conference Call Mark A. Gyetvay, Chief Financial Officer and Member of the Board of Directors Moscow, Russian Federation 13 November 2012
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 Highlights – 3Q 2012
Summary Highlights – 3Q 2012 Increase in revenues driven by higher natural gas and liquids sales prices and volumes: – Natural gas sales increased Y-o-Y by 33.4% and Q-o-Q by 17.3% – Liquids sales increased Y-o-Y by 28.9% and Q-o-Q by 16.1% EBITDA increased Y-o-Y by 33.8% and Q-o-Q by 23.7% Ca
Slide 4: Acquisition of a 49% Stake in Nortgas
Acquisition of a 49% Stake in Nortgas 4
Slide 5: Transaction Summary
Transaction Summary NOVATEK concluded an agreement to acquire a 49% equity stake in ZAO Nortgas from R.E.D.I. HOLDINGS for USD1,375 million (the remaining 51% is indirectly held by Gazprom) Nortgas holds the hydrocarbon production license for the Severo-Urengoyskoye field in YNAO All of the ne
Slide 6: Severo-Urengoyskoye Field Highlights
Severo-Urengoyskoye Field Highlights The Severo-Urengoyskoye field is located 25 Nortgas field km south of NOVATEK’s Yurkharovskoye field NOVATEK fields NOVATEK’s Total PRMS proved reserves as of NOVATEK gas Yamal peninsula Yurkharovskoye condensate pipeline 31 December 2011 Fields 225 bcm of natu
Slide 7: Effect on Reserves and Production
Effect on Reserves and Production Acquisition effect on A 49% share in current Nortgas production total PRMS proved reserves(1) equals to 3.6% of current gas production 1,695 131 12,166 and 5.0% of liquids production by NOVATEK 7% 10% 7% Hydrocarbon deposits at the field are allocated between th
Slide 8: Acquisition Rationale
Acquisition Rationale Value accretive – Acquire proved PRMS reserves at $1.66 per boe as compared to $1.3 per boe paid for Sibneftegas reserves in 2010 – While almost all of Sibneftegas’ reserves are dry natural gas, about 13% of Nortgas’ reserves are liquid hydrocarbons, which significantly incre
Slide 9: Operational Overview
Operational Overview mm Sane NOVATEK ,
Slide 10: Hydrocarbon Production
Hydrocarbon Production Natural Gas Production, mmcm Liquids Production, mt 13,849 13,279 SeverEnergia 13,079 SeverEnergia Sibneftegas Sibneftegas 924 Khanchey Sibneftegas 918 SeverEnergia 854 Khanchey Khanchey SeverEnergia Khanchey Khanchey Khanchey Yurkharov Yurkharov Yurkharov Yurkharov Yurkharov
Slide 11: Purovsky Plant & Vitino Sea Port Terminal
Purovsky Plant & Vitino Sea Port Terminal Total volumes delivered: 925 mt – Yurkharovskoye field: 599 mt – East-Tarkosalinskoye and Khancheyskoye fields: 248 mt – Purchases from our joint venture: 73 mt – Other: 5 mt Total plant output: 918 mt – Stable gas condensate: 711 mt – LPG: 203 mt – Meth
Slide 12: Stable Gas Condensate in Transit
Stable Gas Condensate in Transit Yosu Singapore “Goods in transit” “Goods in transit” “Goods in transit” 30.09.2011 30.06.2012 30.09.2012 ~ 181 thousand tons ~ 120 thousand tons ~ 122 thousand tons 60 mt 60 mt 60 mt 60 mt 61 mt 61 mt USA Thailand Singapore USA South Korea South Korea 61 mt South Kor
Slide 13: Financial Overview – 3Q 12 vs. 3Q 11
Financial Overview – 3Q 12 vs. 3Q 11 13
Slide 14: Comparison of Quarterly Results (RR million)
Comparison of Quarterly Results (RR million) Q-o-Q Y-o-Y 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 +/- % +/- % Oil and gas sales 39,888 50,544 54,152 44,984 52,562 16.8% 31.8% Total revenues 40,033 50,718 54,373 45,145 52,731 16.8% 31.7% Operating expenses (22,921) (28,980) (31,851) (26,780) (29,845) 11.4% 30.2
Slide 15: Market Distribution – Gas Sales Volumes (mmcm)
Market Distribution – Gas Sales Volumes (mmcm) 15,579 16,050 13,447 13,507 12,266 8,823 56.6% 75.8% 12,172 8,361 62.2% 8,719 64.6% 6,966 56.8% 43.4% 6,756 5,300 43.2% 24.2% 5,086 37.8% 4,788 35.4% 3,878 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 Ex-field End-customers • Y-o-Y increase in natural gas sales volume
Slide 16: Natural Gas Sales Volume Mix
Natural Gas Sales Volume Mix 100% 75% 51% 55% 57% 57% 58% 62% 65% 75% 76% 50% 25% 49% 45% 43% 43% 42% 38% 35% 25% 24% 0% 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 Ex-field End-customers 16
Slide 17: Market Distribution – Liquids Sales Volumes (mt)
Market Distribution – Liquids Sales Volumes (mt) 1,148 1,121 1,065 933 948 85.5% 83.7% 982 938 82.4% 878 81.6% 794 85.1% 774 0 0 0 0 0 139 14.9% 166 14.5% 174 18.4% 183 16.3% 187 17.6% 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 Domestic Export • Y-o-Y increase in liquids sales volumes was primarily due to the in
Slide 18: Total Revenues (RR million)
Total Revenues (RR million) Increase due to: Change due to price • 8.0% increase in average realized SGC Change due to volume net export price primarily due to a decrease in export duties; • 9.9% increase in export sales volumes 1,999 132 273 52,731 5,982 547 49 24 (98) 1,185 40,033 2,605 Increase d
Slide 19: Total Revenues Breakdown
Total Revenues Breakdown 3Q 11 9% 2% 1% Natural gas 24% Stable gas condensate 64% LPG 3Q 12 Crude oil 3% 7% 25% Oil and gas products Other 65% 19
Slide 20: Realized Hydrocarbon Prices (net of VAT and export duties)
Realized Hydrocarbon Prices (net of VAT and export duties) 3Q 11 3Q 12 +/(-) +/(-)% 2Q 12 3Q 12 +/(-) +/(-)% Domestic prices 2,637 3,050 413 15.7% Natural gas end-customers, RR/mcm 2,652 3,050 398 15.0% 1,390 1,619 229 16.5% Natural gas ex-field, RR/mcm 1,399 1,619 220 15.7% - 12,278 n/a n/a Stable
Slide 21: Operating Expenses (RR million and % of Total Revenues)
Operating Expenses (RR million and % of Total Revenues (TR)) 3Q 11 % of TR 3Q 12 % of TR 2Q 12 % of TR 3Q 12 % of TR 11,795 29.5% 14,235 27.0% Transportation expenses 13,035 28.9% 14,235 27.0% 4,443 11.1% 4,120 7.8% Taxes other than income tax 4,375 9.7% 4,120 7.8% 16,238 40.6% 18,355 34.8% Non-cont
Slide 22: Transportation Expenses (RR million)
Transportation Expenses (RR million) Change due to tariffs/distance Change due to volume Tariff/Dist. = 86 Volumes = 154 Tanker = 152 14,235 759 Export 73 (49) 11,795 Tariff/Dist. = 113 Other includes: Volumes = (2) • Unallocated rail 1,128 services; Domestic Tariff/Dist. = 44 • Oil products Volumes
Slide 23: 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 44 (622) 165 4,443 (42) 4,120 (81) (6) (59) (4) 282 3Q 11 Natural Gas Crude Property Excise and fuel Other 3Q 12 gas condensate oil tax taxes UPT tax The increase in UPT expense for natural gas was pri
Slide 24: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) Increase due to on-going repair works at our wholly owned subsidiaries 25 15 5 7 1,716 96 1,572 (1) (3) Increase due to: • a 6.0% indexation of base salaries effective 1 July 2012; • an increase in average number of employees due to acquisition of
Slide 25: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) Decrease due to termination of direct payments to the YNAO government to undertake social programs related to the Yamal LNG project 711 14 15 45 2,245 35 37 (372) 1,760 Increase due to: • bonuses accrued to key management for the results achieved for
Slide 26: Profit Attributable to NOVATEK Shareholders (RR million)
Profit Attributable to NOVATEK Shareholders (RR million) 534 8,235 12,698 20,003 (3,011) (172) (4,807) 323 321 (2,440) 8,322 3Q 11 Total OPEX Transport Taxes other Other Finance Share of Income tax Non-controlling 3Q 12 revenues controllable than income income income profit (loss) of expense interes
Slide 27: Financial Overview – 3Q 12 vs. 2Q 12
Financial Overview – 3Q 12 vs. 2Q 12 27
Slide 28: Total Revenues (RR million)
Total Revenues (RR million) Increase due to: Change due to price • 27.5% increase in average realized SGC net Change due to volume export price • offset by 7.9% decrease in export sales volumes 3,062 198 206 52,731 4,920 (391) 224 (11) 8 45,145 (760) 130 Increase due to a 16.7% increase in average r
Slide 29: Total Revenues Breakdown
Total Revenues Breakdown 2Q 12 2% 9% Natural gas 24% Stable gas condensate 65% LPG 3Q 12 3% 7% Crude oil 25% Oil and gas products Other 65% 29
Slide 30: Transportation Expenses (RR million)
Transportation Expenses (RR million) Change due to tariffs/distance Change due to volume Tariff/Dist. = (16) Volumes = (116) Tanker = (212) 1,249 14,235 13,035 25 (15) Export 373 Tariff/Dist. = (18) Volumes = (29) Domestic Tariff/Dist. = 19 Other includes: Volumes = (60) • Unallocated rail services;
Slide 31: 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 4,375 (213) 10 4,120 (41) (7) (4) 2Q 12 Natural Gas condensate Property Excise and fuel Other 3Q 12 gas tax taxes UPT tax The decrease in UPT expense for natural gas and gas condensate was primarily du
Slide 32: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) 1,836 5 38 1,716 55 9 (197) (23) (7) Decrease due to significant bonuses accrued in 2Q12 for the results achieved in 2011 2Q 12 Employee Repair and Electricity and Materials and Rent expenses Transportation Other 3Q 12 compensation maintenance fuel
Slide 33: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) Decrease due to: • significant bonuses accrued in 2Q 2012 to key management for 2,594 the results achieved in 2011; • lower social contributions to non-budget funds due to maximum taxable base achieved by employees in 2Q 2012 (275) 17 20 2,245 3 (62)
Slide 34: Profit Attributable to NOVATEK Shareholders (RR million)
Profit Attributable to NOVATEK Shareholders (RR million) 7,942 220 1 20,003 (2,719) 7,586 255 375 (2,120) (1,200) 9,663 2Q 12 Total OPEX Transport Taxes other Other Finance Share of Income tax Non-controlling 3Q 12 revenues controllable than income income income profit (loss) of expense interest exp
Slide 35: Appendices
Appendices mm Sane NOVATEK -
Slide 36: Maintaining Margins (% of total revenues)
Maintaining Margins (% of total revenues) Due to the disposal of a 20% participation interest in OAO Yamal LNG 170.9% 154.2% 47.2% 44.5% 45.2% 47.9% 46.8 % (2) 39.1% 37.9% 30.1% (2) 20.8% 21.4% 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 EBITDA margin Net profit atributable to NOVATEK margin EBITDA(1) margin net
Slide 37: Increasing Natural Gas Production (mmcm per day)
Increasing Natural Gas Production (mmcm per day) 160 140 120 100 80 60 40 20 0 Nov Nov Nov Dec Dec Dec Mar Mar Mar May May May Feb Feb Feb Jun Jun Jun Oct Sep Oct Sep Oct Sep Jan Aug Jan Aug Jan Aug Apr Apr Apr Jul Jul Jul Gross production Equity share in the gross production of Sibneftegas Ряд5 Equ
Slide 38: Condensed Balance Sheet (RR million)
Condensed Balance Sheet (RR million) 30 September 2012 31 December 2011 +/(-) +/(-)% Total current assets 48,702 58,316 (9,614) -16.5% Incl. Cash and cash equivalents 17,472 23,831 (6,359) -26.7% Total non-current assets 350,521 325,116 25,405 7.8% Incl. Net PP&E 190,032 166,784 23,248 13.9% Total a
Slide 39: Internally Funded Investment Program
Internally Funded Investment Program 30,000 5.0 22,500 4.0 Operating CF / CAPEX 15,000 3.0 RR millions 7,500 2.0 - 1.0 (7,500) 0.0 (15,000) (1.0) 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 CAPEX Operating CF Operating CF/CAPEX Core investm
Slide 40: Total Debt Maturity Profile (RR million)
Total Debt Maturity Profile (RR million) In October 2012, the Group 18,938 19,966 repaid the final tranche of loan 17,449 18,465 from ZAO UniCredit Bank aggregating USD 20 million as 9,841 scheduled In October 2012, the Group placed on the MICEX Stock Exchange the Russian rouble Bonds of RR 20 b
Slide 41: Questions and Answers
Questions and Answers mm Sane NOVATEK a