Novatek: Revenues Up 51% and Profit up 45%

Novatek released its audited consolidated financial statements for the years ended 31 December 2011 and 2010 prepared in accordance with International Financial Reporting Standards (“IFRS”).

Total revenues grew by 50.5% year-on-year to RR 176,064 million for the twelve months ended 31 December 2011 from RR 117,024 million in the corresponding period of 2010, reflecting the overall growth in our hydrocarbon production and sales volumes as well as higher prices for both natural gas and liquid hydrocarbons.

Profit attributable to NOVATEK shareholders increased by 195.2% to RR 119,655million, or RR 39.45 per share, as compared to RR 40,533 million, or RR 13.37 per share, for the corresponding period in 2010, as a result of the higher revenues, our ability to decrease costs as a percentage of total revenues and the net gain realized on the disposal of a 20% equity interest in Yamal LNG. Profit attributable to NOVATEK shareholders in 2011, excluding the net gain on disposal, increased by 44.6% to RR 56,707 million, as compared to RR 39,204 million in 2010.

In 2011, our total net natural gas production, including our equity interest in Sibneftegas’ production, increased by 15,644 million cubic meters, or 42.0% compared to 2010, primarily due to an increase in production at our Yurkharovskoye and East-Tarkosalinskoye fields, as well as the consolidation of our share in Sibneftegas’ production. Our total natural gas sales volumes increased by 16,550 million cubic meters, or 44.6%, in 2011 primarily due to the increase in net production.

Our liquids production increased by 494 thousand tons, or 13.7%, to 4,111 thousand tons compared to 3,617 thousand tons in 2010, due to the expansion of unstable gas condensate production capacity at our Yurkharovskoye field from the field’s on-going development program. During the year, our liquids sales volumes increased by 710 thousand tons, or 20.9%, as a result of the increase in production and a decrease in inventory balances. Also, in 2010 we launched our wholly owned gas condensate pipeline which required a one-time fill of approximately 36 thousand tons of unstable gas condensate.

At 31 December 2011, we had 228 thousand tons of stable gas condensate in transit or storage and recognized as inventory until such time as it is delivered to customers as compared to 264 thousand tons as of 31 December 2010. In 2011, our natural gas inventory balance as of 31 December 2011 decreased to 760 million cubic meters compared to 790 million cubic meters at the end of the 2010 period.

The full set of audited consolidated IFRS financial statements for the years ended 31 December 2011 and 2010 and the related notes thereto as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations are available on the Company’s web site (www.novatek.ru).