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Abu Dhabi Ntnl Enrgy 36UB 3rd Quarter Results



  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.

 

                                                                9M

                             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

     (excl construction
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

 

Executive Summary

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 
worldwide standards.

 

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 
regional experience

 

·      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 
post-period developments:

·      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.

 

 

Comment

 

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 
prudently."

 

 

 

 

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 
base.

 

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.

Operational Highlights

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
construction revenue)
% of overall revenues
                                                          41%     38%      +3%
(excluding supplemental fuel and
construction revenue)
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.

 

Domestic

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.

 

 

International

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
construction revenue)
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%
sold
                                        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.

 

North America

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 
Sedimentary Basin.

 

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.

 

 

UK

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.

 

 

Netherlands

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

firstname.surname@taqaglobal.com

 

 

Contact Information for Media:

 

Abu Dhabi

Thomas Ashby

GVP Corporate Communications

Tel +971 2 691 4802

 

Allan Virtanen

Head of Media

Tel +971 2 691 4894

Mob +971 56 685 2717

Allan.Virtanen@taqaglobal.com

About TAQA

 

www.taqaglobal.com

 

 

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: 
@TAQAGLOBAL

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
QRTEAEFLFEDAFFF -0- Nov/14/2012 10:53 GMT
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