NOVATEK acquires Severneft-Urengoy

PAO NOVATEK announced this week the acquisition of Severneft-Urengoy from EuroChem, a leading global fertilizer company.

Severneft-Urengoy holds the hydrocarbon exploration and production license for the West-Yaroyakhinskiy license area located in the Purovsky district of the Yamal-Nenets Autonomous Region in close proximity to NOVATEK’s existing infrastructure.

The license contains estimated hydrocarbon resources of 918 mmboe according to the Russian resource classification as of 31 December 2016, and produced 816 million cubic meters of natural gas and 93 thousand tons of gas condensate during 2016.

According to NOVATEK’s Chairman of the Management Board, Leonid Mikhelson,
“The acquisition of the West-Yaroyakhinskiy license area increases our resource base in close proximity to our producing assets and makes an immediate contribution to our total gas and liquids production. Gas condensate accounts for a significant portion of the area's reserves, and we expect additional synergies from processing this additional production at our Purovsky plant and our Ust-Luga Complex”.

NOVATEK at a glance

PAO NOVATEK is Russia’s largest independent gas producer and the second-largest natural gas producer in Russia. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. The Company’s upstream activities are concentrated in the prolific Yamal-Nenets Autonomous Region, which is the world’s largest natural gas producing area and accounts for approximately 80% of Russia’s natural gas production and approximately 16% of the world’s gas production. NOVATEK is a public joint stock company established under the laws of the Russian Federation.

The Company’s shares are listed in Russia on Moscow Exchange (MOEX) and the London Stock Exchange (LSE) under the ticker symbol "NVTK".

RUSSIA OPERATIONS

PAO NOVATEK operations are located mainly in the Yamal-Nenets Autonomous Region (“YNAO”) of the Russian Federation. The Group delivers its natural gas on the Russian Federation’s domestic market and liquid hydrocarbons on both the Russian domestic and international markets.

The Group processes unstable gas condensate at its Purovsky Gas Condensate Processing Plant located in close proximity to its fields into stable gas condensate and liquefied petroleum gas. The majority of stable gas condensate is further processed at the Group’s Gas Condensate Fractionation and Transshipment Complex located at the port of Ust-Luga on the Baltic Sea into higher-value refined products (naphtha, jet fuel, gasoil and fuel oil). The remaining stable gas condensate volumes are sold on domestic and international markets.

In 2016, NOVATEK’s marketable hydrocarbons production totaled 537.9 million barrels of oil equivalent (boe), including 66.1 billion cubic meters (bcm) of natural gas and 12,441 thousand tons of liquids (gas condensate and crude oil), resulting in an increase in total hydrocarbons production by 16.3 million boe, or by 3.1%, a decrease in natural gas production by 1.8 bcm, or by 2.7%, and an increase in combined liquids production by 3,347 thousand tons, or by 36.8% as compared with the twelve months 2015.

Total SEC proved reserves, including the Company’s proportionate share in joint ventures, aggregated 12,775 million barrels of oil equivalent (boe), including 1,755 billion cubic meters (bcm) of natural gas and 152 million metric tons (mmt) of liquid hydrocarbons.

Excluding the decrease in the Company’s proportional share in the Yamal LNG joint venture, total proved reserves increased by 2.8% year-on-year, with an organic reserve replacement rate of 168% due to successful exploration works and drilling, which amounted to reserves addition of 899 million boe, inclusive of 2016 production. The primary contributors to additions were the Utrenneye, the South-Tambeyskoye, the Kharbeyskoye, the Dorogovskoye and the Yarudeyskoye fields.

Acquisition
In November 2017,  NOVATEK announced the acquisition of Severneft-Urengoy from EuroChem, a leading global fertilizer company.

Severneft-Urengoy holds the hydrocarbon exploration and production license for the West-Yaroyakhinskiy license area located in the Purovsky district of the Yamal-Nenets Autonomous Region in close proximity to NOVATEK’s existing infrastructure.

The license contains estimated hydrocarbon resources of 918 mmboe according to the Russian resource classification as of 31 December 2016, and produced 816 million cubic meters of natural gas and 93 thousand tons of gas condensate during 2016.

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