Abu Dhabi National Energy Co., the government-owned utility known as Taqa, posted a second consecutive annual loss in 2014 as tumbling crude oil and natural gas prices forced it to take a one-time charge.
Taqa’s loss widened to 3 billion dirhams ($817 million) from 2.52 billion dirhams in 2013, the company said in a statement to the Abu Dhabi stock exchange. Its shares fell as much as 10 percent to 0.72 dirhams and closed Wednesday at 0.73 after Taqa said it won’t pay a dividend on 2014 results.
“The decline of commodity prices is having a significant impact for the whole industry,” Chief Operating Officer Edward LaFehr said on a conference call with analysts. Taqa took an impairment charge of 3.3 billion dirhams and is cutting spending because of “the rapid reduction” in energy prices in the second half of 2014, the company said.
Brent crude, the global oil benchmark, fell 49 percent during the second half of last year as new production in areas such as North America and Russia and the decision by the Organization of Petroleum Exporting Countries not to cut output created a supply glut that outweighed demand. Oil has declined 3.2 percent this year.
Taqa will reduce annual capital expenditure by 39 percent this year to about $1.1 billion, Chief Financial Officer Ryan Wong said on the call. Falling crude prices led the company to trim spending last year too, by 23 percent from 2013 to $1.8 billion, Wong said.
Sales rose to 27.3 billion dirhams from 25.8 billion in 2013 as oil and gas production increased to 158,900 barrels of oil equivalent a day. Output averaged 142,300 barrels a day in 2013, according to the company’s annual report for that year.
Production began last year at the Amstel and Maas oil fields off the Dutch coast, offsetting some reductions at other North Sea fields, LaFehr said. Taqa plans to drill new wells there this year, he said
The company produces power, oil and gas from Canada to North Africa and helps generate most of the electricity sold in the United Arab Emirates, of which Abu Dhabi is the biggest sheikhdom. The company also took an impairment charge in 2013, mostly because of reserve revisions and lower output expected in North America.