- Capital spending falls 73% as ‘discretionary investment’ cut
- Oil prices have dropped more than 50% since mid-2014
Abu Dhabi National Energy Co., the government-controlled utility known as Taqa, reported a wider loss in the second-quarter as lower oil and natural gas prices crimped revenue. The company may sell more bonds this year after tapping debt markets for $1 billion in June.
The net loss was 588 million dirhams ($160 million) in the three months ended June 30 compared with 421 million dirhams in the same period a year earlier, Taqa said in statement to the Abu Dhabi stock market Wednesday. Sales fell 14 percent to 4 billion dirhams.
“While our realized oil and gas prices dropped by 39 percent, the upstream business has adapted to the changes and continued to transform into a more resilient business able to compete in this tough environment,” Saeed Al Dhaheri, Taqa’s acting chief operating officer, said in a separate statement which referred to first-half results.
Taqa produces oil and gas from Canada to North Africa and has stakes in most of Abu Dhabi’s power plants. The company has been cutting costs and trying to reduce debt to deal with oil prices that have dropped more than 50 percent since mid-2014.
The shares dropped 3.6 percent to 54 fils in Abu Dhabi trading Wednesday. The stock has gained 15 percent this year.
Taqa said it cut costs by more than 6.5 billion dirhams since 2015, including a $1 billion bond refinancing that will reduce corporate interest payments by 70 million dirhams a year.
“It’s certainly a possibility that we come back this year,” Chief Financial Officer Grant Gillon said on a conference call Wednesday when asked when the company would return to debt markets. Taqa has bonds coming due in March and October of 2017 and will seek to refinance the borrowings, he said. Taqa has $1.25 billion in bonds maturing those months, according to data compiled by Bloomberg.
Capital spending in the first half fell 73 percent to 1.3 billion dirhams as Taqa completed projects in 2015 and cut “discretionary investment.” Brent crude oil averaged $46.01 a barrel in the second quarter and U.S. natural gas prices were $2.14 per million British thermal units, Taqa said.
Taqa expects to bring the first oil from the Atrush field in the semi-autonomous Kurdish region in northern Iraq to market by the end of this year or early next year, Al-Dhaheri said. The company is working with local authorities to complete a pipeline from the field to the main oil export link from the region, he said. Taqa said in 2013 it expected to pump first oil in 2014.