Novatek announces second quarter and first half 2013 IFRS results

Total revenues in the second quarter and first half 2013 increased by 29.2% and 40.0%, respectively, as compared to the corresponding periods in 2012. The growth in total revenues was mainly due to increase in natural gas sales volumes and higher average natural gas prices as a result of significant expansion of the share of end-users in our total gas volumes sales mix. Revenues growth in the first half 2013 was also due to an increase in liquid hydrocarbon sales volumes.

In the second quarter 2013, we recorded a year-on-year increase of 3.6% in EBITDA, which amounted to RR 21.1 billion. The lower EBITDA growth rate was mainly due to a decrease in the share of liquid hydrocarbons in our total sales volumes mix, which was driven by an increase in inventory balances of stable gas condensate and the corresponding oil products processed following the launch of the first stage of the Gas Condensate Fractionation and Transshipment Complex at the port of Ust-Luga in late June. In the first half 2013, EBITDA amounted to
RR 54.2 billion, representing an increase of 21.4% as compared with the first half 2012.

Profit attributable to shareholders of OAO NOVATEK in the second quarter 2013 increased to
RR 11.6 billion (RR 3.83 per share), or by 20.1%, as compared to the second quarter 2012. Profit attributable to shareholders of OAO NOVATEK in the first half 2013 increased to RR 34.4 billion (RR 11.36 per share), or by 11.4%, as compared to the first half 2012. The dynamics of profit was impacted by non-cash foreign exchange effect.

In the second quarter and first half 2013, our natural gas sales volumes increased by 8.8% and 13.1%, respectively, as compared to the corresponding periods in 2012, due to growth in production at the Yurkharovskoye field and an increase in purchases of natural gas. At 30 June 2013, we recorded 1,411 million cubic meters of natural gas as inventory in underground storages as compared to 1,050 million cubic meters in the corresponding period of 2012.

In the second quarter 2013, our total liquid hydrocarbon sales volumes decreased by 5.4%, as compared to the corresponding period in 2012, despite higher production volumes. The decrease was primarily due to inventory build-up following the start of stable gas condensate processing at the Ust-Luga Complex. Liquid hydrocarbon sales volumes in the first half 2013, increased by 29.2% compared to the corresponding period in 2012. The increase was mainly due to the commencement of gas condensate purchases from joint ventures and production growth from our subsidiaries. At 30 June 2013, 447 thousand tons of stable gas condensate and oil products were in transit or storage and recognized as inventory, as compared with 295 thousand tons of stable gas condensate as at 30 June 2012.

(in millions of Russian roubles)