Shares of Abu Dhabi National Energy Co., which took an impairment of $858 million in North America last year, climbed the most in three weeks after it returned to profit in the second-quarter and said it plans to sell assets.
The state-controlled utility, also known as Taqa, reported a second-quarter attributable profit of 239 million dirhams ($65 million), rebounding from a loss of 172 million a year earlier, it said in a statement to the Abu Dhabi stock market. Revenue from oil and gas operations boosted profits. The shares rose 2.8 percent to 1.12 dirhams at the close.
“We know the company is leveraged and it went on an investment spree, acquiring assets across geographies,” Sebastien Henin, who oversees $90 million as head of asset management at the National Investor in Abu Dhabi, said today by telephone. “Now that the bottom line is improving, it’s time for them to sell some of the assets and improve cash flow.”
Taqa, which suspended oil operations in Iraq this week because of escalating instability near the country’s Kurdish region, said it expects to pay 2016 debt maturities from its own cash flow and unspecified asset sales. The company has available liquidity of $5 billion, including $1.1 billion in cash, and doesn’t intend to return to the bond market until 2017, according to today’s statement.
Taqa, which produces power, crude oil and natural gas from Canada to North Africa, has $26.5 billion of loans and bonds outstanding, according to data compiled by Bloomberg.
Revenue from oil and gas jumped to 3.1 billion dirhams from 2.1 billion dirhams in the second quarter of 2013, Taqa said. Sales from the power and water division dropped to 2.4 billion dirhams from 2.5 billion dirhams.
The utility started commercial operations at its Bergermeer gas storage facility in the Netherlands in April, while its U.K. operations produced a record average volume of 61,500 barrels of oil equivalent in the first half, Taqa said in the statement. Last year it took over oilfield operations in Iraq and oil and gas deposits in the U.K. from BP Plc.
Expansion of the Takoradi 2 power station in Ghana is more than 90 percent complete, and the plant will be operating in the fourth quarter, the company said. Taqa ended talks to invest in two hydroelectric plants in India and the Sulaymaniyah power station in Iraq’s Kurdish region, steps that will improve cash flow and reduce debt leverage, it said.
“We are starting to see the results of our focused strategy bearing fruit,” Chief Operating Officer Edward LaFehr said in the statement. “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.”