Novatek Earnings up with More Liquids Production

Novatek, Russia's largest independent, produced 16.2bn m³ of natural gas in Q3, down 5% on the year. Its earnings before interest and amortisation (Ebitda) were however, at $670mn, up 14% as the company accelerated deliveries of liquids and refined products. Liquids production grew 30% to 3,060 metric tons, which the company said was due to the start of commercial production at the Yarudeyskoye oil field at the end of 2015.

It reported $2bn revenue in the July-September period, representing an increase of 5% as compared with the same quarter of 2015.

The three train Yamal LNG project operator reported operational expenditures increase by 16% to $78mn, the highest quarterly reading post-rouble devaluation. The trains are expected to produce 16.5mn mt/year of LNG, with the first cargo set to ship in the second half of 2017.

Pavel Kushnir, an energy analyst at Deutsche Bank based in Moscow, said that while Novatek would not need to contribute its cash to Yamal project no longer, will soon begin to receive dividends from the equity projects. He also forecasted $2bn free cash flow for 2016, while cash distribution plans could come to the table afterwards. "We are likely to hear on those plans as Novatek speaks about strategy later this year," he noted.

Murat Basboga