Abu Dhabi Ntnl Enrgy (36UB) - 3rd Quarter Results
RNS Number : 0915R
Abu Dhabi National Energy Co PJSC
14 November 2012
TAQA Nine Month 2012 Results
14 November 2012, Abu Dhabi, UAE - Abu Dhabi National Energy Company PJSC
("TAQA"), a publicly listed company on the Abu Dhabi Securities Exchange (ADX:
TAQA), today reported its operational and financial results for the third
quarter and the nine months to 30 September 2012.
Q3 2012 Q3 2011 % change 9M 2012 2011 % change
Total assets 114,666 114,200 - 114,666 114,200 -
Total revenues 8,833 6,168 +43% 20,618 18,743 +10%
Power & Water (1) 2,094 1,998 +5% 6,086 5,575 +9%
Oil & Gas (2) 2,973 3,012 -1% 8,828 9,011 -2%
Fuel revenue 952 1,158 -18% 2,890 4,157 -30%
Construction revenues 2,814 0 n/a 2,814 0 n/a
Total Cost of sales 6,718 3,724 +80% 14,412 11,713 +23%
Cost of sales
costs) 3,987 3,724 +7% 11,681 11,713 -
Construction costs 2,731 0 n/a 2,731 0 n/a
EBITDA 3,290 3,727 -12% 9,786 10,670 -8%
Profit before tax 695 1,513 -54% 3,196 3,851 -17%
Net profit after minority
interests (288) 537 693 1,124 -38%
Basic earnings per share
(AED) (0.05) 0.09 0.11 0.19 -42%
Net debt/EBITDA (times) 5.3 4.9
Net debt to capital (%) - 77% 77% -
All amounts in AED million unless otherwise stated
(1) Excludes supplemental fuel revenue and includes net liquidated damages in
relation to Shuweihat 2
(2) Includes Gas Storage and Other Operating Revenue
The global economy continued to be volatile in the third quarter, particularly
with respect to commodity prices. Both Brent and WTI crude oil saw softening
compared with the same period last year and North American natural gas prices
were 40% lower, though some improvement has been seen post period.
TAQA's nine month results demonstrated the resilience of its global portfolio
with a strong performance from Power & Water helping to ease the effect of
weaker commodity prices - particularly in North America.
Power & Water delivered a solid operational performance, with forced outage
rates at Shuweihat 2 and Jorf Lasfar, in particular, well below best in class
Oil & Gas had mixed results, with a solid performance from the UK and Dutch
entities, although North America continued to show weak results.
TAQA has taken a number of actions to position its North American portfolio to
weather the low part of the cycle:
· Firstly, Ed LaFehr was appointed President and he brings a wealth of
· Secondly, TAQA will continue to review its portfolio, either to
monetise non-core acreage or, where valuations are low, acquire acreage and
production in core areas.
· Thirdly, TAQA will continue to evaluate the economics of its on-going
operations and future capital programme: year to date approximately 1,500
boe/d of unprofitable production has been shut-in. Additionally, the 2013
capital programme has been reduced by 30% compared with 2012, subject to
approval from the Board of Directors in December.
· Finally, the business will be subject to continuous cost review to
ensure it maximises the efficiency of its operational costs and overhead.
In terms of liquidity, TAQA is well positioned for the future, with
approximately AED 18 billion in cash and unused credit facilities at the end
of the third quarter. TAQA recently launched the syndication of the
refinancing of its $2 billion revolving credit, which has been well received
in the market.
Looking forward, TAQA is well positioned for growth, with the following
· In October, the Government of the Republic of Turkey and the Government
of the Emirate of Abu Dhabi signed a joint declaration regarding investment in
power generation and mining in southern Turkey.
· In the Kingdom of Saudi Arabia, TAQA, along with consortium partners,
submitted the lowest tariff proposal for the development of the 2,000 MW
Rabigh 2 plant.
· TAQA announced the discovery of a new oil accumulation in the UK
Northern North Sea Contender Block that is expected to correspond to 10-30
million barrels of oil in place.
Carl Sheldon, Chief Executive Officer of TAQA, said:
"We have had a strong performance from across our power businesses, with over
95% availability from our domestic fleet a testament to their operational
excellence. Similarly, in the UK North Sea, we have seen a good performance at
Brae and Tern help to offset an unexpected shutdown at North Cormorant and
weather delays at Pelican. The resilience of our global portfolio has helped
to ease the effect of the weaker commodity price environment - particularly in
North America, where natural gas prices have nearly halved over the last year,
requiring us to make some tough choices on shutting-in uneconomic production
and cutting capital expenditures related to dry natural gas.
"We continue to make good progress on our strategic goal of building out our
operational footprint in MENA and our recent agreement with the Turkish
Government, and our proposed power project in the Kingdom of Saudi Arabia,
reiterate the strength of our passport to do business in the region."
Stephen Kersley, Chief Financial Officer of TAQA, said:
"Our financial performance over the last quarter has been impacted by a series
of one-off items - both cash and non-cash, which have suppressed our net
result. We have taken pragmatic action to address the impact of weaker
commodity prices and will continue to monitor North American gas prices
particularly closely in the context of capital plans for 2013. That
notwithstanding, we have strong liquidity which we continue to manage
Financial Summary: 9M 2012 versus 9M 2011
Total revenues for 9M 2012 were AED 20.6 billion, 10.0% higher year-on-year,
compared with total revenues of AED 18.7 billion in 9M 2011, largely due to
higher power and construction revenues, offset by lower supplemental fuel
revenues and oil and gas revenues.
Total Oil & Gas revenues (including gas storage and other income) decreased
from AED 9.0 billion to AED 8.8 billion for 9M 2012. Much of this decline is
due to a weakening of commodity pricing in Q3 2012, and particularly weak
natural gas prices in North America, which declined by 37% year-on-year. As a
consequence, TAQA has disposed of non-core assets to consolidate its footprint
and shut-in uneconomic wells, leading to lower production in North America.
Total Power & Water revenues (excluding supplemental fuel income), increased
to AED 6.1 billion in 9M 2012 from AED 5.6 billion in 9M 2011. This 9%
year-on-year increase was primarily due to the contribution from Shuweihat 2,
which became fully operational in Q3 2011.
Fuel income decreased 31% year-on-year, due to the availability of natural gas
and consequent lower use of alternative fuel supplies at TAQA's domestic power
plants. This decrease, combined with the related decreased in fuel expenses,
reduced the margin that TAQA had benefitted from by AED 81 million during Q3
2012 compared with the same quarter of last year.
Cost of sales increased by 22.6% from AED 11.8 billion to AED 14.4 billion,
primarily due to the construction costs associated with Units 5 and 6 at Jorf
Lasfar in Morocco. Operating expenses decreased by 2.6%, while depreciation,
depletion and amortisation increased 4.3%, reflecting TAQA's increased asset
Falling aluminium prices have impacted earnings from TAQA's investment in the
Sohar Aluminium LLC plant, which fell from AED 242 million in 9M 2011 to AED
119 million during the same period in 2012, including a AED 76.4 million
decline in Q3 2012 alone.
While there was a positive foreign exchange effect of AED 66 million in 9M
2012, compared with a positive impact of AED 53 million in 9M 2011, in Q3 2012
the weakening of the US Dollar against the Moroccan Dirham, Indian Rupee, Euro
and Sterling resulted in a post-tax impact of AED 92 million.
Due to a prolonged downturn in the value of certain investments in TAQA's
Carlyle Fund portfolio, a AED 83 million impairment was booked in September in
line with IFRS accounting standards.
Profit before tax was AED 3.2 billion, 17% lower year-on-year, principally
driven by lower production and revenues in our oil and gas business, due to
weaker North American gas prices.
Net profit after minority interests decreased year-on-year to AED 693 million
for 9M 2012, versus AED 1.1 billion for 9M 2011.
TAQA has strong liquidity with cash and cash equivalents of AED 3.5 billion.
Total debt of AED 72.9 billion in 9M 2012 decreased by 1% from AED 73.5
billion in the same period last year, and net debt of AED 69.3 billion in line
year-on-year with AED 69.5 billion in 9M 2011. However, TAQA's Net
Debt/Capital ratio decreased slightly to 76.7% from 77.3% in 9M 2011. Net
Debt/EBITDA increased from 4.9x to 5.3x.
Power & Water
TAQA's Power & Water business performance continues to generate steady, stable
cash flows, with a top-quartile performance for technical availability.
9M 9M 2011
Key Performance Indicators 2012 % change
Total revenues in AED million
6,086 5,575 +9%
(excluding supplemental fuel and
% of overall revenues
41% 38% +3%
(excluding supplemental fuel and
Total generation capacity (MW) Global 17,162 16,334 +5%
Domestic 12,494 12,494 -
International 4,668 3,840 +22%
Total power production (GWh) Global 58,097 47,360 +23%
Domestic 42,272 36,678 +15%
International 15,825 10,682 +48%
Technical availability of power Global
generation business (%) Domestic 95.6 94.5 +1%
International 94.4 90.3 +5%
Water desalination capacity (MIGD) Total 887 887 -
Total water desalination (MIG) Total 179,915 163,931 +10%
TAQA produced 15,825 GWh of electricity and 179,915 MIG of water, generating
total revenues of AED 6.1 billion for the 9M 2012. The 9% increase in revenues
compared to the same period last year, reflects the contribution from
Shuweihat 2 which came into full production in October 2011. Global technical
availability was 95.3% for the period, in line with the excellent performance
of TAQA's power assets in previous periods.
During this period of high demand, TAQA's domestic power plants generated
42,272 GWh of power and desalinated 179,915 MIG of water. Technical
availability was high at 95.6%, with a particularly strong performance in the
third quarter reflecting the quality of TAQA's domestic power plants, somewhat
offset by forced outages at Fujairah 2. In particular, Shuweihat 2 recorded an
excellent performance, with a forced outage rate of only 0.5% for the quarter,
a strong performance considering it is such a new plant.
TAQA's international power portfolio, which comprises of assets in Morocco,
Ghana, India, Saudi Arabia, Oman, Iraq and the USA, generated 4,668 GWh of
power during the first half, an increase of 48% over 9M 2011 due to the
resumption of operations at Takoradi, which had been suspended in 2011.
International technical availability was 94.4%.
In Morocco, the Jorf Lasfar plant performed extremely well, recording a forced
outage rate of only 3% during the third quarter of 2012. The expansion project
is proceeding well with 73% of construction complete. As a result, TAQA has
recorded AED 2.7 billion in construction costs, as all critical sourcing,
design and engineering activities have been completed. Corresponding
construction revenue of AED 2.8 billion, including a construction margin of 3%
(AED 83 million), has been recognised.
In July, TAQA announced that it had secured the requisite parliamentary
approval and has signed financing arrangements for the 110 MW expansion of the
gas-fired Takoradi 2 (T2) power plant in Ghana. The TAQA-operated T2 power
plant currently represents 15% of Ghana's installed power production capacity.
Results from the Sohar aluminium plant in Oman were AED 119 million, a
decrease of AED 123 million compared with the same period last year due to a
worldwide drop in aluminium prices, partially offset by lower costs of raw
materials, as well as a planned turnaround to refurbish one smelter pot.
Oil & Gas
TAQA's Oil & Gas business comprises strong, well-resourced centers of
excellence supporting a portfolio of assets across North America, the UK North
Sea and the Netherlands.
Key Performance Indicators 9M 2012 9M 2011 % change
Total revenues in AED million 8,828 9,011 -2%
% of overall revenues
59% 62% -3%
(excl. supplemental fuel and
Total production Global 134.4 137.7 -2%
North America 84.5 87.6 -4%
(mboe/day) UK 42.6 42.0 1%
Netherlands 7.4 8.1 -9%
Average net realized price of crude oil North America 78.3 84.9 -8%
UK 112.1 112.9 -1%
(US$ per barrel) Netherlands 105.6 99.7 -6%
Average net realized price of gas sold North America 2.42 4.16 -42%
UK 10.14 9.05 +12%
(US$ per thousand feet) Netherlands 10.44 10.41 -
Total Oil & Gas revenues, including gas storage and other operating revenues,
were AED 8.8 billion for 9M 2012, a decrease of 2% compared to 9M 2011. This
decline was driven primarily by the sharp fall in North American gas prices
and lower production in North America.
Commodity pricing environment
While the period has seen oil prices remaining at similar levels year on year,
there has been a sharp weakening of North American gas prices, with Henry Hub
averaging US$2.67/mmbtu during the period, compared to US$4.26/mmbtu for the
equivalent period in 2011.
Oil prices have been largely flat year on year, with the WTI price averaging
US$96.54/bbl for the 9M 2012 compared with US$95.88/bbl in the same period in
2011. Similarly, Brent crude averaged US$111.96/bbl in 9M 2012 vs
US$111.35/bbl in 9M 2011.
Production in North America declined by 4% to 84.5 mboe/day, principally
reflecting the impact of non-core asset disposals and the shut-in of
uneconomic production. North American natural gas prices were 42% lower during
the third quarter of 2012 compared with the same quarter last year, though
some improvement has been seen post period.
This prolonged cycle of low natural gas prices has presented a number of
arbitrage opportunities, particularly in switching from coal to natural
gas-fired power plants. There are reasons to believe that the wide discounts
for North American natural gas will diminish in the long term, particularly
with the emergence of LNG export projects from Western Canada.
Notwithstanding this outlook, TAQA has taken a number of actions to position
its portfolio to weather the low part of the cycle. Firstly, a new President,
Ed LaFehr, was appointed during the quarter to run the North American
business. Mr LaFehr was previously Senior Vice President at Talisman Energy
Inc. and brings a wealth of operational experience in the Western Canada
Secondly, TAQA will continue to review its portfolio, either to monetise
non-core acreage or, where valuations are low, acquire acreage and production
in core areas. In October, TAQA completed an acquisition of oil and gas assets
in central Alberta, Canada from NuVista for approximately C$162 million. The
acquisition includes 45,700 hectares of land rights and approximately 5,800
boe/d of natural gas production rich in high-value liquids located adjacent
the company's existing portfolio.
Third, TAQA will continue to evaluate the economics of its on-going operations
and future capital programmes. Year to date, the Company has shut-in
approximately 1,500 boe/d of unprofitable production. Additionally, the 2013
capital programme has been reduced by 30% compared with 2012, subject to
approval from the Board of Directors in December.
Finally, the business will be subject to continuous cost review to ensure it
maximises the efficiency of its operational costs and overhead.
Production volumes in the UK North Sea were 42.6 mboe/day during the period, a
1% increase compared to the same period last year. Production in the UK North
Sea was affected by an unplanned platform shutdown at North Cormorant and
weather delays at Pelican, offset by higher production at Tern and Brae.
Earnings were impacted by the enactment during Q3 2012 of the 2011 tax
increase in respect of asset retirement obligations. Following pressure from
TAQA and other industry participants, this was more favourable than had
originally been announced in respect of tax treatment of abandonment expenses,
but has still resulted in a one off charge of AED 272 million.
Production in the Netherlands averaged 7.4 mboe/day, a 9% decrease compared to
the same period last year, reflecting the mature nature of the fields.
In the Netherlands, the Bergermeer Gas Storage project is proceeding on time
and on budget. Construction of civil works is on-going and the drilling
program is expected to commence in the fourth quarter of the year. A new, open
registration for 3TWh (terawatt hours) is currently under way.
Post Period Developments
In the Power & Water business, TAQA announced that the Government of the
Republic of Turkey and the Government of the Emirate of Abu Dhabi signed a
joint declaration expressing their strong support for the co-operation between
EÜAŞ (Electricity Generation Co. Inc.) and TAQA regarding an investment in,
and optimisation of, existing lignite power plants in the Afşin-Elbistan
region of southern Turkey and the development of mining sites and new power
generating facilities in the same region.
In the Kingdom of Saudi Arabia TAQA, along with consortium partners Qatar
Electricity and Water Company and Samsung Engineering, submitted the lowest
tariff proposal for the development of the Rabigh 2 Independent Power Project
in the Kingdom of Saudi Arabia. Rabigh 2 is a proposed greenfield heavy fuel
oil power plant project with a capacity of approximately 2,000 MW. The project
will be developed on a build-own-operate basis.
In the Oil & Gas business, TAQA announced the discovery of a new oil
accumulation in the UK Northern North Sea Contender Block. The exploration
well was drilled from TAQA's North Cormorant platform and encountered an oil
accumulation that is expected to correspond to 10-30 million barrels of oil in
place. The field is expected to be processed through the North Cormorant
platform. TAQA owns a 60% interest in and is the operator of the block.
- ENDS -
For further information:
TAQA Investor Relations, Abu Dhabi
Tanis Thacker, Head of Investor Relations
+971 2 691 4933
Mohammed Mubaideen, Investor Relations Manager
+971 2 691 4964
Contact Information for Media:
GVP Corporate Communications
Tel +971 2 691 4802
Head of Media
Tel +971 2 691 4894
Mob +971 56 685 2717
Established in 2005, TAQA is a diversified international energy group
headquartered in Abu Dhabi, the capital of the United Arab Emirates, and
listed on the Abu Dhabi Securities Exchange (ADX: TAQA).
TAQA's business is made up of three operating divisions spread across the
entire energy value chain: power generation & water desalination; oil and gas
exploration & production; and emerging & alternative energy technologies.
Power & Water: TAQA is one the largest independent power producers in the
world and the majority owner of the facilities that provide 98% of the water
and electricity requirements in Abu Dhabi. TAQA's power plants are located in
the UAE, Morocco, Oman, Saudi Arabia, Ghana, India, and USA.
Oil & Gas: with operations in Canada, UK, the Netherlands, USA and Iraq,
TAQA's oil and gas business includes exploration and production, underground
gas storage and pipeline transportation.
Emerging & alternative energy technologies: TAQA Energy Solutions is dedicated
to alternative and technology-driven energy initiatives for long-term
efficient energy production and generation.
TAQA's vision is to deliver 'Energy for Growth': growth within the business;
social and economic progress in the communities where TAQA operates; and
increased value for our shareholders.
Over the past 40 years the UAE and Abu Dhabi have pursued a vision embodied by
progressive development, investment and the highest global standards. TAQA is
proud to align its strategy both domestically and globally to Abu Dhabi's
economic vision 2030, working towards sustainable economic development.
For more information about TAQA visit: www.taqaglobal.com or Twitter:
This information is provided by RNS
The company news service from the London Stock Exchange
QRTEAEFLFEDAFFF -0- Nov/14/2012 10:53 GMT
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