Page 10 - FSUOGM Week 44 2019

FSUOGM INVESTMENT FSUOGM
Naftogaz raises $500mn from Eurobonds
UKRAINE
Naftogaz placed a further more than $1bn in Eurobonds in July.
UKRAINE’S natural gas monopoly Naftogaz has raised $500mn via a seven-year Eurobond, the company said in a statement on November 5.
The senior unsecured bond is issued under 144A/Reg S format and carries an interest of 7.625% payable semi-annually. The Eurobond is (subject to, inter alia, the satisfaction of condi- tions precedent) to be issued by Kondor Finance plc for the sole purpose of making a $500mn loan to Naftogaz.
The re-offer yield reflects a 127bp premium to Ukraine’s sovereign debt due in 2026, the lowest spread to sovereign achieved by Ukrainian stat- ed-owned companies this year.
The Eurobond does not have a state guaran- tee. Fitch has rated Naftogaz at B (with positive outlook), with notes also expected to be rated at B; at the same level of Ukraine’s sovereign rating.
The order book peaked at almost 2.9-times oversubscription, the statement reads. World- wide investors from the US, UK, Switzerland, Germany, & other EU Member States; Asia or Middle East have participated on the offering.
“We are inspired with investors’ high inter- est to Naftogaz’ securities. Our efforts to reform the company and the Ukrainian gas market
help us reduce our financing costs and compete more effectively,” said Andriy Kobolyev, CEO of Naftogaz.
The company expects to see the funds on November 8, following the completion of legal formalities. Citi acted as sole bookrunner on the issue. Freshfields Bruckhaus Deringer, AEQUO, White & Case, Avellum, Linklaters, Allen&Overy acted as legal counsels on the offering.
In July, Naftogaz successfully placed Eurobonds totalling €600mn and $335mn. Five-year euro-denominated bonds at 7.125% and three-year US dollar-denominated bonds at 7.375% were launched.
Naftogaz placed Eurobonds for the maxi- mum amount approved by its shareholder, the Ukrainian government, and at “a rate below the approved ceiling”. The Eurobond issues do not carry a state guarantee, according to the compa- ny’s statement.
The July issue was approximately 2.5-times oversubscribed. Citi and Deutsche Bank acted as lead managers on the issue. Freshfields Bruck- haus Deringer, AEQUO, White & Case, Avel- lum, Linklaters and Clifford Chance provided legal advice. ™
PERFORMANCE
Novatek revenues slump on low prices
RUSSIA
Profits soared however, thanks to divestments at Arctic LNG-2.
RUSSIA’S top LNG supplier Novatek suffered a decline in revenues in the third quarter, as a result of lower oil and LNG prices. But its net profits nevertheless soared thanks to gains from the sale of shares in its Arctic LNG-2 project.
The company’s revenues slumped 13.8% year on year to RUB189bn ($2.96bn) in the three months, while pre-tax EBITDA fell 11.5% to RUB105bn.
Weaker international prices more than offset a 5.2% rise in Novatek’s oil and gas production to 145.2mn barrels of oil equivalent (boe), on the back of higher output at its Yamal LNG terminal. The company was supported by stable revenues from sales domestically.
Despite its weaker underlying performance, Novatek saw its net profits soar to RUB370bn in the three months, up from a mere RUB45.9bn a year earlier, thanks to cash generated from the sale of a 30% stake in Arctic LNG-2 to Chinese and Japanese investors.
The company took a final investment deci- sion (FID) on Arctic LNG-2 on Russia’s Gydan Peninsula in September. The project is slated to start up in 2023 and produce 19.8mn tonnes per year (tpy) of LNG at its peak.
Novatek’s capital expenditure in the third quarter reached RUB36.5bn, up from RUB24.8bn a year earlier, because of work at Arctic LNG-2 and other upstream investments.
Novatek has set its sights of producing as much as 70mn tpy of LNG by 2030, underpin- ning Russia’s ambition to become a top-tier global LNG supplier. It has acquired a number of new gas fields in recent years on Gydan and the Yamal peninsula to build up a resource base to support its new projects.
Novatek is on track to secure rights to a new gas block in the Arctic that the govern- ment is planning to auction off later this year. The Bukharinsky block, situated on the shore of the Ob Bay, is believed to hold as much as 213bn cubic metres of gas and 44mn tonnes of condensate.
Russia set a starting price of RUB2.133bn for bids to acquire a licence for the block. The date of the auction has not been specified, but the terms of the contest only allow operators that already have the right to produce LNG on Yamal and Gydan to participate. This effectively bars all but Novatek from taking part. ™
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Week 44 06•November•2019