TAQA achieves record first half earnings

Abu Dhabi, United Arab Emirates – TAQA, the Abu Dhabi National Energy Company, has announced a net profit of AED 513 million for the first half of 2014.

TAQA achieved record oil and gas production, averaging 158 000 bpd of oil during the period, representing a 24% increase against the first half of 2013. This significant production growth, combined with operational efficiencies and higher North American gas prices, raised TAQA’s underlying revenues to AED 11.3 billion, up 29% year-on-year, and resulted in the company’s highest ever EBITDA of AED 7.9 billion, up 42% against H1 2013.

As a result of the group strategy changes and reorganisation announced in May 2014, TAQA maintained existing operating expenditure levels while achieving higher production, despite an escalating cost environment. General and administrative (G&A) costs were reduced by 15% year-on-year. TAQA’s net profit was AED 513 million, up from a loss of AED 66 million in H1 2013, delivering earnings of 9 Fils per share.

Oil & gas

Following the integration of TAQA’s new Central North Sea assets, its UK operations produced a record average volume of 61 500 bpd of oil during the first half, increasing UK netbacks by 50% year-on-year.

TAQA achieved stable production levels of 89 000 boe/d in North America despite lower capital expenditure. Netbacks increased by 27% due to stronger oil and gas prices and lower costs.

Power & water

TAQA’s power and water production both grew 2% to 32 250 GWh and 122 955 million imperial gallons per day (MIGD) respectively. The company’s international power generation assets produced 6692 GWh, up 13% year-on-year, boosted by the completion of the Jorf Lasfar expansion in Morocco. TAQA’s domestic power and water fleet produced 25 558 GWh, flat compared to H1 2013.

Technical availability at the international fleet increased to 87.3% from 84.1%, despite an outage at the Takoradi 2 power station in Ghana. Availability at TAQA’s domestic power and water fleet slightly decreased from 90.3% to 89.9%, due to forced outages at the Fujairah F1 and F2 power and water stations.Growth projects

In April, TAQA started preliminary commercial operations at its Bergermeer gas storage facility in the Netherlands. When complete in 2015, Bergermeer will significantly contribute to the security of European energy supply.

The TAQA-operated Atrush block in the Kurdistan region of Iraq is on schedule to start producing approximately 30 000 bpd of oil in 2015. In August, TAQA temporarily suspended its operations at the Atrush Block as a result of recent developments around the Kurdistan Region of Iraq. TAQA continues to closely monitor the security situation with its Atrush partners and the Kurdistan Regional Government.

In June, TAQA completed the expansion of the Jorf Lasfar power station in Morocco, increasing its capacity from 1356 to 2056 MW. The power station supplies more than 50% of the country’s electricity demand.

The expansion of TAQA’s Takoradi 2 power station in Ghana is over 90% complete and will be inaugurated in Q4 2014.

Following changes in group strategy, TAQA ended negotiations to invest in two hydroelectric plants in India and the Sulaymaniyah power station in the Kurdistan region of Iraq. The withdrawals will improve free cash flow, reduce debt leverage over time and deliver a stronger sustainable financial performance.TAQA estimates its capital expenditure for the full year 2014 to be US$ 300 million lower compared to the full year 2013, totalling approximately US$ 2 billion.

Financing and liquidity

TAQA successfully refinanced its US$ 1.2 billion bond in April, at attractive pricing. The company expects to pay 2016 maturities from improved operational cash flow and asset sales and does not intend to return to the bond market until 2017, at the earliest.

At the end of the period, TAQA had available liquidity of US$ 5 billion, including US$ 1.1 billion of cash in hand.

Comment

Edward LaFehr, Chief Operating Officer, said: “We have seen a great performance during the first half. Record oil and gas production and strong prices have driven our EBITDA to its highest levels. We are starting to see the results of our focused strategy bearing fruit, with safety and operational excellence at the core of everything we do. Greater efficiencies and cost control, combined with a conservative view on growth projects and acquisitions, will ensure we can deliver our commitment to reduce debt and improve financial performance.”

Adapted from press release by Hannah Priestley-Eaton

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