Page 123 - RusRPTAug21

9.2 Major corporate news 9.2.1 Oil & gas corporate news
● Novatek
Novatek reported its 2Q21 IFRS results on July 28. Revenue, EBITDA and net income were all up significantly y/y given the low base of 2Q20, and they were stronger q/q as well. We calculate the 1H21 dividend at RUB27.13/share, implying a 1.7% yield. The results are likely the start of what should be solid results across the sector, and should be viewed positively by the market.
Novatek already reported its 2Q21 operating results. Total gas production was up 8% y/y to 19.95bcm and liquids output was up 7% y/y to 3.5mnt. Volumes of natural gas sales were up 5% y/y to 17.7bcm, with domestic sales up 6% y/y to 15.3bcm. LNG sales were down 3% y/y to 2.4bcm. The average natural gas price was $86.1/mcm (+38% y/y and +19% q/q). Total revenue was up 84% y/y and 8% q/q to RUB264.5bn, which is broadly in line with our and consensus estimates.
EBITDA jumped 3.5x y/y to RUB83.2bn, while the EBITDA margin was flat q/q. EBITDA was in line with our and consensus expectations. Normalized EBITDA grew more than 2x y/y to RUB163bn, which is just under our forecast. The share of EBITDA from Yamal LNG grew 128% y/y, and Arcticgas was up 138% y/y. Other associates improved from RUB624mn to RUB3.7bn in 2Q21.
Net income more than doubled y/y to RUB99.3bn, beating our and consensus forecasts. Income from associates was down to RUB58bn in 2Q21 vs. RUB72bn in 2Q20, and the company reported an FX loss of RUB21bn. Our miss mainly came from lower expected income from associates. Net income excluding FX, which is used to calculate dividends, came in at RUB89bn, which is ahead of our estimate, implying a 1H21 dividend of RUB27.13/share, on our calculations.
Capex, FCF and net debt. Novatek’s capex was down 23% y/y and up 14% q/q to RUB47.4bn, with most of the spending going to developing LNG projects and launching the North-Russkiy cluster. The company reported FCF of RUB104bn in 2Q21 vs. negative FCF in 2Q20 (RUB57bn) and RUB31.9bn in 1Q21. The company’s net debt increased to RUB54bn vs. RUB40bn at YE20, but it was down vs. 1Q21 mainly due to the decrease in long-term debt.
The results look solid to us and are likely the start of what should be a very good 2Q21 for the sector. We view the results positively. During the call tomorrow, 29 July, we expect to hear an update on the gas market and on the progress being made on Arctic LNG 2, along with details on the plans for Obskiy LNG.
Novatek has established a Subcommittee on Climate and Alternative
123 RUSSIA Country Report August 2021 www.intellinews.com