Abu Dhabi's Taqa Posts Loss as Lower Oil Prices Hurt Salesby
Net loss of 608 million dirhams compares with profit last year
Company adds to batch of assets it has put option to sell
Abu Dhabi National Energy Co., which produces oil and natural gas from Canada to North Africa, reported a net loss for the first quarter as revenue declined due to lower crude and gas prices.
The loss of 608 million dirhams ($166 million) compared with a profit of 256 million dirhams in the same period last year, when results benefited from a one-time U.K. tax credit, the company known as Taqa said in a statement to the Abu Dhabi stock exchange. Sales fell 24 percent to 3.9 billion dirhams. The price of oil and gas sold by the company dropped 43 percent, it said in a separate press release.
Taqa, controlled by the Abu Dhabi government, has cut costs and is looking for ways to refinance debt. Capital expenditure for 2016 is expected to drop 42 percent from last year to less than 1.8 billion dirhams, the company said. Taqa plans by July to refinance a $1 billion bond due in October and is discussing options for bank financing, selling bonds or a private placement, Chief Financial Officer Grant Gillon said Wednesday on a conference call. The company will probably also refinance about $800 million of debt due next year, he said.
“The big focus for us is to continue to improve the cash flow,” Gillon said. Cutting costs and improving cash flow will help Taqa reduce debt, he said.
The utility said it expects to start pumping oil this year at the Atrush field in Iraq’s Kurdish region. The project could produce as much as 30,000 barrels a day. Oil and gas production in the first quarter fell 3 percent to 153,700 barrels of oil equivalent, while power output climbed 7 percent to a record 17,022 gigawatt hours. The company generates most of the electricity sold in the United Arab Emirates.
Taqa added European, North American and Iraqi operations to a batch of assets it has a put option to sell, Gillon said on the conference call. The company has an option to sell assets to a “related party” for an agreed-upon price, according to the company’s 2014 and 2015 annual reports. The value of the assets for sale rose to about 30 billion dirhams as assets were added, according to the 2015 report, compared with a value of about 20 billion dirhams in the 2014 report.
The company is also seeking to sell its Lakefield wind-power plant in the U.S. and its stake in Massar Solutions PJSC, a U.A.E. vehicle rental and transportation services business, according to the company’s earnings report.