Novatek - Yamal LNG Posts Solid Margins Despite Weak Spot Markets
Yamal LNG reported 1H19 IFRS results on Friday. Profitability remained impressively resilient despite a weak gas pricing environment and mostly spot LNG sales. Total estimated EBITDA from the project, including the trading margin, stood at an impressive $5.0/MMBtu, we calculate, with LNG spot prices averaging $5.5-6.5/MMBtu. The overall project economics were virtually in line with our model assumptions despite much weaker gas market conditions in 2Q19-3Q19 and provide solid upside going into 2020-21 in light of a capacity utilization increase and a rising share of long-term oil-linked offtake. Meanwhile, we expect a substantial reduction in capex and pickup in shareholder loan repayment going forward.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).
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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