Page 12 - GLNG Week 17

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Novatek’s earnings down 33% in first quarter
PERFORMANCE
RUSSIA LNG exporter and second-largest gas producer Novatek has reported flat quar- ter-on-quarter and 7% lower year-on-year sales in the first quarter of 2020 under IFRS. The com- pany’s Ebitda dropped by 33% q/q to $684mn, missing the consensus expectations by 7%, while revenues were down 4% q/q to $2.8bn on lower gas sales and average oil and LNG prices, broadly in line with expectations.
Novatek previously saw a sharp dip in inter- national sales in the first quarter. As anticipated by the analysts, the company posted a loss of $462mn in the reported quarter, on the back of recognised impairments of contingent com- pensation of about $500mn, higher profit tax intake q/q and a loss on joint ventures of about $2.2bn.
The loss was attributed by BCS Global Mar- kets mainly to the currency loss of Novatek’s flagship LNG project Yamal, after the ruble
weakened against the euro (swinging from $500mn profit in the fourth quarter of 2019), partly mitigated by FX gains on the loans pro- vided by Novatek to joint ventures of $2.15bn.
BCS GM believes that the weakness showed by Novatek in 1Q20 is priced in and expected “hit by the drop in oil and LNG price in March, as well as various impairments and FX loss on the bottom line level.”
At the same time, the company reported pos- itive free cash flow (FCF) of $357mn, while the debt fell 35% during the period to $1.1bn thanks to positive FCF.
BCS GM analysts maintain a Hold recom- mendation on Novatek with a target price of $170 implying 19% upside and suggest focusing on the comments on the current LNG market environment, Arctic LNG-2 project progress, other LNG projects, and the dividend pay-out guidance.™
AFRICA
Damietta restart plans collapse
A deal to restart the mothballed Damietta LNG export terminal in Egypt has collapsed, the state-owned Egyptian Natural Gas Holding Company (EGAS) said on April 25.
The deal to restart the plant had been signed by EGAS, Italy’s Eni, and Spain’s Naturgy in February. It fell through because of the uncertainties created in the market by the coronavirus (COVID-19) pandemic, EGAS said.
However, the Egyptian company added that it was ready to renegotiate the deal. Naturgy has also expressed a willingness to reach a new agreement.
Damietta LNG, which was shuttered
in 2012 so gas could be redirected to the domestic market, is operated by Union Fenosa Gas, a 50:50 joint venture between Eni and Naturgy.
NEWS IN BRIEF AMERICAS
Tellurian executes agreements for $50mn financing and reduction of term loan
Tellurian announced today it has executed an agreement to sell $56mn of zero coupon, unsecured notes for gross proceeds of $50mn and provide the lender with warrants to purchase up to 20mn shares of Tellurian common stock, subject to customary closing conditions.
In conjunction with this financing, Tellurian has also entered into an agreement to amend its 2019 term loan, including
a reduction of the principal amount by $17.1mn. The agreement provides for a paydown of $2.1mn in cash, converts $15mn of principal value into equity through the issuance of approximately 9.3mn shares to the lender, and provides the lender with warrants to purchase up to approximately 4.7mn shares of Tellurian common stock, subject to
customary closing conditions. Tellurian’s unaudited cash and cash
equivalents balance pro forma for the financing transaction would have been approximately $100.7mn as of March 31, 2020.
President and CEO Meg Gentle said: “Tellurian is building cash reserves during this challenging time in global markets, positioning for a strong emergence from COVID-19 restrictions. We remain bullish on long-term natural gas demand growth, underscoring the acute need for Driftwood LNG.”
TELLURIAN, April 28, 2020
Freeport LNG requests
permission to launch third
train
Privately owned Freeport LNG has asked the US Federal Energy Regulatory Commission (FERC) for permission to place its third train into service by April 30. The company said
it has filed all documentation required by the regulator and the orders to demonstrate
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Week 17 30•April•2020