Abu Dhabi National Energy Co., the government-owned utility that produces crude from Canada to the U.K., has slashed 22 percent of its oil and gas jobs in the past year amid a loss due to tumbling global prices.
The company known as Taqa plans to cut spending 2.5 billion dirhams ($681 million) this year after reducing capital expenditures by 1.05 billion dirhams in the first half, according to an e-mailed statement from the company on Thursday. Headcount at the Abu Dhabi headquarters is down 32 percent since July last year.
Oil producers are cutting costs after Brent crude slumped 48 percent last year and is down another 12 percent this year. Taqa’s oil and gas production averaged 150,000 barrels of oil equivalent a day in the first six months, down 5 percent from a year earlier as revenue from the business slumped 48 percent.
“While the current commodity price environment has impacted the whole industry, our results show that we are delivering on our accelerated cost transformation program,” Edward LaFehr, Taqa chief operating officer, said in the statement.
Taqa reported a second quarter loss of 421 million dirhams compared with income of 239 million dirhams a year earlier. Total revenue dropped 28 percent to 4.7 billion dirhams. The shares fell 4.3 percent in Abu Dhabi trading, the sharpest retreat since July 13 on a closing basis and breaking a three-day winning streak. It’s down 16 percent this year, under performing Abu Dhabi’s benchmark ADX General Index, which rose 4.4 percent for the period.
The company on Wednesday refinanced a $3.1 billion 5-year credit facility, with an opening margin of 50 basis points over Libor, it said. Taqa has net debt of 71.9 billion dirhams, or 84 percent of net capital.
Taqa has hired investment and advisory firm Blackstone Group LP to review options for its debt obligations including including ways to reduce financing costs, people with knowledge of the matter said in June.
“We are in the ordinary course, in the transformation effort, looking right across our entire space in terms of the opportunities to reduce our costs, and financing costs are obviously a significant part of our cost base,” Grant Gillon, chief financial officer, said on a conference call after the results. Also, “we continue to look at where there are opportunities to recycle capital out of non-core assets.”
Taqa’s revenue from electricity and water dropped 3.6 percent to 2.3 billion dirhams for the second quarter. Taqa helps generate most of the electricity sold in the United Arab Emirates, of which Abu Dhabi is the biggest sheikhdom.
Brent crude, the global oil benchmark, averaged $63.37 a barrel in the second quarter, down 42 percent from a year earlier as growing production from North America to Saudi Arabia contributed to a glut.
Taqa started full commercial operations at its gas storage Bergermeer project in the Netherlands in April, providing 4.1 billion cubic meters of gas storage capacity, enough to supply 2.5 million Dutch households for a year. It’s now in the process of expanding its Takoradi 2 power plant in Ghana from 220 to 330 megawatts and commissioning a 100-megawatt Sorang hydro plant in northern India and a 30 million gallon per day water desalination facility in Fujairah, U.A.E.