Taqa profits slip on lower oil, gas prices

ABU DHABI — Abu Dhabi National Energy Company, or Taqa’s revenues from oil and gas plunged 47 % to Dh1.852 billion in the first quarter of the year. A decrease of Dh1.654 billion reflects the impact the lowering oil and gas prices have on Taqa revenues.

The break-up of Dh1.852 billion shows that weaker oil prices contributed Dh1.3 billion and Dh370 impact came from lower gas prices. Oil prices have tumbled from last June’s peak of US$115 a barrel to US$67.52 a barrel on Wednesday May 13, showing a decline of 41.65 %.

However, total revenues declined 29 % to Dh5.1 billion and net profit dropped seven % to Dh256 million compared to the same period a year ago.

The effect of declining revenues on net profit was almost fully offset by the one-off benefit of the UK North Sea tax rate changes which resulted in a credit of Dh553 million, Taqa said in a regulatory filing to Abu Dhabi Securities Exchange.

“Today’s results demonstrate the value of our diversified portfolio in a lower oil and gas price environment,” said Edward LaFehr, Taqa chief operating officer. “Continued strong safety and operating performance combined with the significant savings delivered by our cost transformation initiatives are helping to mitigate the effects of the challenging market conditions.”

Available liquidity stood at Dh14.2 billion at the end of the quarter, including Dh3.6 billion of cash. Taqa reduced its debt by Dh1.01 billion due to repayment of debt. Taqa’s total assets dropped to Dh112.9 billion as at 31 March, 2015 from Dh115 billion as at 31 December, 2015.

The energy company produced 157,900 oil-equivalent barrels per day, almost flat compared to 158,300 barrels per day during the first quarter of 2014. This was result of an increase in production from operations in both the United Kingdom and the Netherlands, offset by a slight decrease in production from North America.

Higher technical availability at Taqa’s power plants helped increase production by 18 % to 15,898 gigawatt hours from 13,482 gigawatt hours during the first quarter of 2014. Of this, 11,440 gigawatt hours were produced in the UAE and 4,458 gigawatt hours internationally.

Water desalination volumes increased to 59,430 million imperial gallons from 59,022 million imperial gallons during the first quarter of 2014. Operating expenses and net general and administrative costs were Dh353 million lower in comparison to the same quarter in 2014.

“Taqa’s cost transformation programme is progressing well and is on track to deliver considerable cash cost savings,” the energy company said. This can be seen in the decline in the administrative costs in comparison to the first quarter of 2014 and some of the operating expense reductions.

The energy company is expected to reduce operating and general and administrative expenses by Dh1.5 billion annually by the end of 2016.

As a result of the lower commodity price environment, Taqa is committed to reduce its 2015 full-year capital expenditure to Dh3.8 billion, a reduction of 40 % compared to the full-year 2014. During the quarter, the Company reduced capital expenditure to Dh918 million, down 30 % from the prior year period. – Khaleejtimes.com

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