Abu Dhabi National Energy Company PJSC has reported financial results for the second quarter and first half of 2008.
Key highlights of the results for the first six months of 2008:
- Net profit (after minority interests) for the first six months of 2008 grew 249% to AED 869 million, compared with AED 249 million for the same period in 2007. The increase is due to the acquisitions made since Q1 2007, as well as the impact of higher oil and gas prices.
- Basic earnings-per-share grew 249% to 21 fils for the first six months of 2008, compared with 6 fils for the same period in 2007.
- EBITDA increased by 152% to AED 5.2 billion for the first six months of 2008, compared with AED 2.1 billion for the same period in 2007.
- Total revenue grew by 202% to AED 8.6 billion, compared with AED 2.8 billion for the same period in 2007:
- Revenue from oil and gas activities was AED 4.2 billion, compared with AED 153 million for the same period in 2007. This increase reflects the acquisition of upstream assets in North America and Europe since Q2 2007. High average oil and gas prices experienced during the period have also been a contributing factor.
- Revenue from the electricity and water business grew by 24% to AED 2.6 billion, from AED 2.1 billion for the same period in 2007, excluding revenues from supplemental fuel sales.
- Revenue derived from gas storage grew to AED 302 million, compared with AED 80 million for the same period in 2007.
- Finance costs increased to AED 1.9 billion from AED 1.2 billion to fund acquisitions.
Key highlights of the results for the second quarter of 2008:
- Net profit (after minority interests) for the quarter grew 154% to AED 471 million, compared with AED 186 million in the same quarter in 2007. The increase reflects profits from TAQA's acquisitions as they have been integrated into the company as well as the impact of higher oil and gas prices.
- Basic earnings-per-share grew by 154% to 11 fils for the quarter, compared with 4 fils for the same period in 2007.
- EBITDA(1) increased by 156% to AED 2.9 billion in Q2 2008, compared with AED 1.1 billion in Q2 2007.
- Total revenue grew by 155% to AED 4.6 billion, compared with AED 1.8 billion for the same period in 2007:
- Revenue from oil and gas activities was AED 2.3 billion, compared with AED 77 million for the same period in 2007. This increase reflects the acquisition of upstream assets in North America and Europe
- since Q2 2007. High average oil and gas prices experienced during the period have also made a positive contribution.
- Revenue from gas storage grew to AED 86 million, compared with AED 8 million for the same period in 2007.
- Revenue from the electricity and water business increased slightly to AED 1.4 billion, compared with AED 1.2 billion the second quarter of 2007, excluding revenues from supplemental fuel sales.
- Finance costs increased to AED 972 million from AED 597 million reflecting the financing arrangements put in place to fund acquisitions over the previous 12 months.
- As at June 30 2008 total assets were AED 85.9 billion.
Upstream and midstream
- The upstream and midstream businesses generated revenue of AED 2.5 billion, representing 55% of total revenue.
- Total production for the second quarter of 2008 averaged 119.2 thousand barrels of oil equivalent per day (mboe/day), split between TAQA North (96.7 mboe/day), TAQA Energy (7.4 mboe/day) and TAQA Bratani (15.1 mboe/day).
- The average net realized price of crude oil sold in Q2 2008 was US $110.11 per barrel for TAQA North in North America and US $128.54 per barrel for TAQA Energy and TAQA Bratani in Europe. The average price for the total production in North America and Europe was US $113.82 per barrel.
- Average net realized price for natural gas sold in Q2 2008 was US $10.14 per thousand cubic feet (mcf) for TAQA North and US $8.51 per mcf for TAQA Energy and TAQA Bratani. The average price for total production in North America and Europe was US $9.83 per mcf.
- TAQA North had a drilling success rate of 100% in Q2 2008.
- Results represent significant growth due to the impact of TAQA's acquisitions in 2007 and strong commodity prices.
- The downstream business generated revenue of AED 2.1 billion in the second quarter, comprising 45% of total revenue.
- TAQA's downstream business now has global generation capacity (gross) of 9,423 Mw. During Q2 2008, total power production was 12,545 Gwh, made up of 9,079 Gwh in the domestic market and 3,466 Gwh internationally.
- TAQA's total water desalination in Q2 2008 was 48,495 million Imperial gallons.
- Technical availability of the power generation businesses in Q2 2008 averaged 94.5%, with an average domestic availability of 99.1% and an average international availability of 87.6%.
Peter Barker-Homek, Chief Executive Officer of TAQA, said, "These results show the significant change in the nature of our business compared to just 12 months ago. While our domestic power generation and water desalination assets have continued to deliver solid performance, we are now seeing the full impact of the acquisitions made in the past year on TAQA's results. High oil and gas prices have also boosted growth in revenue and profits.
"For the second quarter in a row we have seen profit growth of over 150% in a year-on-year comparison, and 32% compared with the first quarter of 2008. This substantial growth is reflected in earnings per share of 21 fils for the first six months of 2008 compared to six fils last year.
"Our focus now, as a management team, is to ensure the continued and effective integration of these, and other high-quality assets, into TAQA's business. This process has been underway for some time and, as you would expect, we are already seeing the benefits of this."
Corporate activity during Q2 2008
In June, TAQA announced the issuance of AED 4.15 billion of convertible bonds which will convert into common shares on September 1, 2008 at an exchange ratio of 500 shares for each AED 1,000 bond.
Activity after the close of the period
On July 7, TAQA announced it had signed a Sale and Purchase Agreement with Shell U.K. Limited and Esso Exploration and Production (UK) Limited to purchase the equity pertaining to operating licenses for six offshore fields and two non-operated subsea tie-backs situated in the Northern North Sea. Average expected daily production in the region of 40 mboe/day will represent a significant increase to TAQA's existing European footprint.
In July, TAQA issued US $1.5 billion of notes under its Medium Term Note program. The offering consisted of US $1.0 billion of five year notes maturing in 2013 and US $0.5 billion of 10-year notes maturing in 2018.
Note on comparative data
Since the beginning of 2007, TAQA has completed a number of acquisitions which have been fully or partially consolidated into the period under review. In Q2 2007, TAQA completed the acquisition of CMS Generation, contributing two months of revenue to that quarter. In subsequent months TAQA acquired Northrock Resources and Pioneer Canada, significantly increasing the company's upstream assets. The largest company acquisition to date, PrimeWest, was completed on January 16, 2008, and a full quarter of results is included for the first time. The effect of these acquisitions should be considered when making year-on-year comparisons.