Slide 1: Second Quarter 2009 Operational and Financial Results Conference Call
Second 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, 20 August 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 – 2Q 2009
Summary Results – 2Q 2009 Increase in revenues and earnings driven by higher natural gas prices and liquids sales volumes – Natural gas sales increased by 19.8% 19 8% Y-o-Y Y o Y and 5.7% 5 7% Q Q-o-Q oQ – Liquids sales decreased by 1.7% Y-o-Y and increased by 129.4% Q-o-Q Cash flow from operati
Slide 4: Operational Overview
Operational Overview nm sae MOVATEK ;
Slide 5: Hydrocarbon Production
Hydrocarbon Production Natural Gas Production, mmcm Liquids Production, mt 719 8,173 Other Other 661 7 378 7,378 7 563 7,563 Other Khanchey Other Khanchey Other Khanchey Khanchey Khanchey 535 Other Yurkharov Khanchey 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: i 711 mt – East-Tarkosalinskoye and Khancheyskoye fields: 354 mt (100% of net production) – Y kh Yurkharovskoye k fi ld 350 mtt (99% off nett production) field: d ti ) – Other : 7 mt Total plant output: 706 mt – St bl gas condens
Slide 7: Stable Gas Condensate in Transit
Stable Gas Condensate in Transit “Goods in transit” Kirkenes (Norway) 30.06.2008 Purovsky 2 tankers Processing Vitino ~ 105 thousand tons Plant l t “Goods in transit” 31.03.2009 3 tankers ~ 179 thousand th d tons t “Goods in transit” 30.06.2009 Amsterdam 2 tankers Rotterdam ~ 111 thousand tons Antwe
Slide 8: Financial Overview – 2Q 09 vs. 2Q 08
Financial Overview – 2Q 09 vs. 2Q 08 8
Slide 9: Comparison of Quarterly Results (RR million)
Comparison of Quarterly Results (RR million) 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Oil and gas sales 20,411 19,437 16,061 16,316 22,376 Total revenues 21,352 20,463 16,581 16,981 23,148 Operating expenses 11,822 11,936 12,135 11,379 15,036 (1) EBITDA 10 339 10,339 9 633 9,633 5 822 5,822 6 899 6,899 9 334 9
Slide 10: Market Distribution – Gas Sales Volumes (mmcm)
Market Distribution – Gas Sales Volumes (mmcm) 8,678 8,563 7,979 8,226 7,704 3,841 44.3% 3,430 43.0% 4,016 48.8% 4,596 53.7% 300 3.4% 5,773 74.9% 23 0 3% 0.3% 24 0.3% 0.0% 0 4,526 56.7% 4,186 4,537 50.9% 52.3% , 3,967 46.3% 0 0.0% 1,931 25.1% 2Q Q 08 3Q 08 4Q Q 08 1Q Q 09 2Q Q 09 Ex-field E-trading
Slide 11: Market Distribution – Liquids Sales Volumes (mt)
Market Distribution – Liquids Sales Volumes (mt) 894 705 646 608 577 776 86.8% 426 65 9% 65.9% 517 73.4% 378 65.5% 439 72.2% 14 2.2% 6 1.0% 1.0% 7 5 0.8% 1 0.1% 206 31.9% 193 33.5% 181 25.6% 164 27.0% 117 13.1% 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Domestic CIS Export • Y-o-Y and Q-o-Q growth in liquids sal
Slide 12: Total Revenues (RR million)
Total Revenues (RR million) Change due to tariffs/distance Change due to volume Due to decrease in geological and Total average realized geophysical g p y research prices i increased i d by b 24.1% 24 % services provided to our associates (3,706) (357) (67) (39) 2,499 405 05 ((247)) 23,148 (833) 21,
Slide 13: Total Revenues Breakdown
Total Revenues Breakdown 2Q08 4% 3% 2% Natural gas 3% 7% Stable condensate 50% LPG 31% Crude oil 2Q09 7% 2% 2% 1% Oil products 56% Polymers 32% Other 13
Slide 14: Realized Hydrocarbon Prices (net of VAT and export duties)
Realized Hydrocarbon Prices (net of VAT and export duties) 2Q 08 2Q 09 +/(-) +/(-)% 1Q 09 2Q 09 +/(-) +/(-)% Domestic prices 1,842 , 1,932 , 90 4.9% Natural gas end end-customers, customers, RR/mcm 1,799 , 1,932 , 133 7.4% 1,327 - (1,327) -100.0% Natural gas e-trading, RR/mcm - - n/m n/m - 1,836 1,8
Slide 15: Operating Expenses (RR million and % of Total Revenues)
Operating Expenses (RR million and % of Total Revenues (TR)) 2Q 08 % of TR 2Q 09 % of TR 1Q 09 % of TR 2Q 09 % of TR 4,229 19.8% 8,295 35.8% Transportation expenses 5,273 31.1% 8,295 35.8% 1,792 8.4% 1,935 8.4% Taxes other than income tax 1,921 11.3% 1,935 8.4% 6,021 6 021 28.2% 28 2% 230 44.2% 10,2
Slide 16: Transportation Expenses (RR million)
Transportation Expenses (RR million) Change due to tariffs/distance Change due to volume Tariff/Dist. = (78) Volumes = 447 Tanker = 330 9 33 8,295 (41) 1,369 Export Tariff/Dist. = (124) Volumes = 506 Other includes: • Unallocated rail CIS = (36) services; Domestic = (73) • Oil products transportatio
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 - 94 (72) 13 1,935 1,792 22 173 - - (87) 2Q 08 Natural Gas Crude Property Excise tax Other 2Q 09 gas condensate oil tax UPT tax The decrease in UPT tax by RR 43 million, or 2.6%, was primarily due to a
Slide 18: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) 25 1,743 62 7 (75) (61) 4 1,469 (198) (38) Decrease in production of polymers and insulation tape products and the associated Decrease in geological decrease in purchases of raw and geophysical materials research services provided id d to t our ass
Slide 19: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) 1,516 28 15 1,281 23 (213) (9) (11) (52) (16) 2Q 08 Payroll Social and Concession Rent Legal, audit & Depreciation Insurance Other 2Q 09 charitable management consulting expense 19
Slide 20: Financial Overview – 2Q 09 vs. 1Q 09
Financial Overview – 2Q 09 vs. 1Q 09 20
Slide 21: Total Revenues (RR million)
Total Revenues (RR million) Change due to price Change due to volume 152 145 - 104 3 23 148 23,148 3,083 259 (47) (5) 1,919 16 981 16,981 1,776 (1,222) 1Q 09 Natural Stable gas LPG Crude Oil Polymers Other 2Q 09 gas condensate oil products revenues 21
Slide 22: Total Revenues Breakdown
Total Revenues Breakdown 1Q09 Natural gas 7% 1%0%2% 2% 16% Stable condensate LPG 72% Crude oil 2Q09 7% 2% 2% 1% Oil products Polymers 56% 32% Other 22
Slide 23: Transportation Expenses (RR million)
Transportation Expenses (RR million) Change due to tariffs/distance Change due to volume Tariff/Dist. = (108) Volumes = 442 Tanker = 306 3 3 8,295 1,557 (1) Export Tariff/Dist. = (205) Other includes: Volumes = 186 • Unallocated rail services; 5,273 CIS = (12) Domestic = 11 • Oil p products 840 tran
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 60 - 1 1,935 1,921 - 23 31 (89) (12) 1Q 09 Natural Gas Crude Property Excise tax Other 2Q 09 gas condensate oil tax UPT tax The decrease in UPT tax by RR 47 million, or 2.9%, was primarily due to a dec
Slide 25: Materials, Services and Other Expenses (RR million)
Materials, Services and Other Expenses (RR million) 130 5 1,492 21 45 1,469 (107) (8) (108) (1) Increase in production of polymers and insulation tape products and the associated increase in purchases of raw materials Decrease in geological and geophysical research services provided to our associate
Slide 26: General and Administrative Expenses (RR million)
General and Administrative Expenses (RR million) 44 5 3 9 1,281 166 54 (24) 1,100 (76) Increase due to performance-related bonuses paid in 2Q 09 1Q 09 Payroll Social and Legal, audit & Business Depreciation Rent Concession Other 2Q 09 charitable consulting trip 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% 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Ex-field End-customers (incl. e-trading & traders in remote points) 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 Aug Jan Aug Jan Aug Jan Apr Apr Apr Nov Nov 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. 2Q 09 Avg. 79 mmcm/day 78 mmcm/day 84 m
Slide 30: Condensed Balance Sheet (RR million)
Condensed Balance Sheet (RR million) 30 June 2009 31 December 2008 +/(-) +/(-)% Total current assets 24,718 25,428 (710) -2.8% Incl. Cash and cash equivalents 7,945 10,992 (3,047) -27.7% Total non-current assets 161,673 113,578 48,095 42.3% Incl. Net PP&E 157,410 108,714 48,696 44.8% Assets classifi
Slide 31: Total Debt Maturity Profile (RR million)
Total Debt Maturity Profile (RR million) 25,000 22,757 20,000 17,450 10,728 15,000 10,000 12,029 5,000 0 0 2010 2011 2012 Short-term debt Current portion of long-term debt Long-term debt Current debt maturity profile as of 30 June 2009 with repayments in the 12 months ended 30 June 2010 2010, 2011 2
Slide 32: Profit Attributable to NOVATEK Shareholders (RR million)
Profit Attributable to NOVATEK Shareholders (RR million) 993 1,796 7,053 353 18 7,178 1,081 56 37 (4,066) (143) 2Q 08 Total OPEX Transport Taxes other Other Finance Share of Income tax Non-controlling 2Q 09 revenues controllable than income income income profit (loss) of expense interest expenses (e
Slide 33: Profit Attributable to NOVATEK Shareholders (RR million)
Profit Attributable to NOVATEK Shareholders (RR million) 6,167 4,011 27 (623) 20 7,178 (1,307) ((3,022)) ((14)) (215) 2,134 1Q 09 Total OPEX Transport Taxes other Other Finance Share of Income tax Non-controlling 2Q 09 revenues controllable than income income income profit (loss) of expense interest
Slide 34: End-customers natural gas prices analysis
End-customers natural gas prices analysis FTS price Premium to FTS price FTS price growth Y-o-Y Actual price growth Y-o-Y 585 571 436 299 248 2,137 320 2,042 , 243 128 52 68 88 58 30 17 38 55 2,019 1,864 1,699 1,784 1,718 1,846 1,801 1,553 1,650 1,553 1,650 1,526 1,633 1,380 1,316 1,171 0 0 2Q 08 2Q
Slide 35: Questions and Answers
Questions and Answers a= sae MOVATEK s