Novatek 1Q 20 - EBITDA slightly below consensus, FCF exceeds estimates
Today, Novatek published its 1Q 20 results, which came in almost in line on revenue with our estimates and consensus, while EBITDA came in weaker than the market expectations. Besides, we should note that the companys net profit became negative in 1Q 20, however it was caused mainly by non-cash expenses from revaluation of Arctic LNG 2 project and FX-related losses. As a result, this non-cash losses had no impact on Novateks net operating cash flow, which came in slightly weaker compared to our estimates due to lower than expected EBITDA. At the same time, free cash flow exceeded our forecasts on lower than projected capital expenditures and accounted for USD 268 mn.Novatek is an independent gas producer and natural gas producer in Russia. Co. is engaged in the exploration, production, and processing of natural gas and liquid hydrocarbons. Co.'s upstream activities are concentrated in the Yamal-Nenets region, which is a natural gas producing area and accounts for a significant part of Russia's natural gas production. Co.'s three core fields are located in the regions of Yurkharovskoye, East Tarkosalinskoye and Khancheyskoye. Co. maintains natural gas reserves of approximately 1,144 bcm. Co.'s total net proved reserves totals around 8,088 million barrels of oil equivalent (boe).
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