NOVATEK acquires 49% of Nortgas

NOVATEK (“NOVATEK” and/or the “Company”) announced today the conclusion of an agreement to acquire a 49% equity stake in ZAO Nortgas (“Nortgas”) from R.E.D.I. HOLDINGS for $1,375 million. The transaction is expected to close by year-end 2012. Nortgas holds the hydrocarbon production license for the Severo-Urengoyskoye field, located in the Nadym-Pur-Taz and Purovskiy regions of the Yamal-Nenets Autonomous District and is in close proximity to NOVATEK’s existing production, transportation and processing infrastructure. According to international petroleum firm DeGolyer & MacNaughton, the PRMS proved reserves of Nortgas as of 31 December 2011 were appraised at 1.7 billion barrels of oil equivalent, of which over 13% are classified as liquid hydrocarbons. Hydrocarbon deposits of the Severo-Urengoyskoye field are allocated between the Eastern and Western domes. During the first nine months 2012, the Severo-Urengoskoye field produced 3.1 billion cubic meters of natural gas and 320 thousand tons of de-ethanized gas condensate. Commercial production at the Western dome commenced in 2001, and it is estimated that the production launch at the Eastern dome will more than double the field’s natural gas output and triple the output of gas condensate. According to NOVATEK’s Chairman of the Management Board, Leonid Mikhelson, “The ability to acquire a significant asset such as Nortgas is consistent with our overall strategy to expand our reserve base and raise our production profile in our core region of operations. We expect significant synergies due to Severo-Urengoyskoye field’s close proximity to our existing assets and infrastructure, which will primarily result in additional returns from processing gas condensate at our Purovsky Plant and the Ust-Luga complex”.