Page 12 - FSUOGM Week 08 2021

FSUOGM PERFORMANCE FSUOGM

Novatek posts strong Q4 earnings

on higher prices and output gains

RUSSIA RUSSIAN gas supplier Novatek posted high- Capital expenditure was in line with the
er-than-expected earnings for the fourth quarter, company’s full-year guidance at RUB200bn,
Novatek was among on the back of improved gas prices and increased and reached RUB57bn in the fourth quarter,
a handful of major oil production. as Novatek continued spending on its Arctic
firms to achieve output Net income more than tripled $575mn in LNG-2 project, due on stream in 2023, along
growth last year. the three-month period, or 5% below the fore- with other LNG infrastructure.
cast consensus among analysts, but revenues Free cash flow (FCF) was slightly negative
grew 29% quarter on quarter to $2.8bn, or 3% in the final three months of the year, as widely
above the consensus, and EBITDA soared 36% predicted, and Novatek reported $0.5bn in net
to $888mn, surpassing predictions by 2%. debt at the end of December, versus a $0.2bn net
“In addition to the expected earnings growth, cash position at the end of the third quarter. This
which was driven by higher production volumes, reversal was due to loans it provided to Arctic
inventory releases and higher benchmark oil and LNG-2 and its other joint ventures.
gas prices, the contribution from the joint ven- For the year, profit attributable to sharehold-
tures was bigger than we had expected, driven ers sank to RUB67.8bn, from RUB865.5bn a
mainly by a robust increase in Yamal LNG’s year before, owing to weaker prices and a hike
EBITDA,” analysts at Sberbank CIB wrote. in spending.
Yamal LNG saw surprisingly high utilisation last Novatek is bullish on the outlook for the
year, flowing a total of 18.8mn tonnes. Its gas and global LNG market, with CFO Mark Gyetvay
condensate was also sold at a higher margin than predicting at a conference earlier this month
anticipated by analysts. that a supply shortfall of about 150mn tonnes per
Novatek was among a handful of major oil year (tpy) could emerge within ten years, unless
and gas producers to record a growth in output additional final investment decisions (FIDs) are
in 2020, with many taking supply offline or stall- taken.
ing investments because of the market collapse. Only one FID on new LNG supply was taken
The Russian firm extracted 1.66mn barrels of last year, by Sempra Energy at the 3.25mn tpy
oil equivalent per day during the year, versus ECA project in Mexico. However, Qatar last
1.62mn boepd in 2019. week approved a $29bn expansion at the North
Net income when adjusted for revaluation Field earlier this month, which will raise its liq-
and foreign exchange items increased by 59% uefaction capacity from 77mn to 110mn tpy by
q/q to $769mn, surpassing the consensus fore- 2027.
cast by 27%. Under a policy approved last year, Gyetvay said Novatek was still on track to
Novatek will issue 50% of its adjusted net income take an FID on its next export project, the 5mn
in 2020 in dividends, amounting to a RUB85bn tpy Obsk LNG development, in 2021, having
($1.15bn) payout. postponed the decision from last year. ™

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