TAQA Reports 2Q, First Half 2009 Financial Results

Abu Dhabi National Energy Company PJSC ("TAQA") has reported financial results for the second quarter and first half of 2009.

Key highlights for the first six months of 2009:

  • Despite the lower relative pricing environment and currency effects, total revenue was flat year-on-year at AED 8.6 billion compared with AED 8.6 billion for the same period in 2008.
  • Revenue from the electricity and water business, excluding supplemental fuel, increased by 14% to AED 2.9 billion, from AED 2.6 billion for the same period in 2008. This was primarily due to the expansion of Taweelah B and revenue from the Red Oak toll acquired in December 2008.Supplemental fuel revenues were AED 2.0 billion in 2009, compared with AED 1.4 billion in 2008 due to higher back up fuel cost in 2009 primarily in the domestic subsidiaries. These costs are passed through to the offtakers.
  • Revenue from oil and gas activities (including gas storage and other revenue) declined by 22% to AED 3.6 billion, compared with AED 4.6 billion for the same period in 2008, as a result of lower net realized oil and gas prices and devaluation of CAD and EUR against AED, partly offset by revenue from Northern North Sea assets acquired in December 2008.
  • Cost of sales were AED 6.3 billion in 2009, an increase of AED 1.5 billion (33%) over AED 4.7 billion in 2008. The increase was primarily driven by AED 1.2 billion of costs related to assets acquired in December 2008 and an increase of AED 734 million related to fuel costs (which are passed through to the offtakers).
  • Administrative and other expenses were AED 351 million in 2009 compared to AED 432 million in 2008. The decrease of 19% was attributable to lower foreign exchange rates, as well as savings due to synergies.
  • Net profit, after minority interests, was AED 176 million compared with AED 869 million in the same half in 2008. The decrease in net profit was mainly attributable to lower commodity prices.
  • EBITDA was AED 3.9 billion for the first half of 2009, versus EBITDA of AED 5.2 billion in the same period in 2008.
  • Basic earnings per share was 3 fils for the half, compared with 21 fils for the same period in 2008.
  • Total assets as at June 30, 2009 were AED 90.2 billion.
  • Net cash was AED 5.0 billion, up from AED 4.1 billion at the end of Q1 2009.
  • Net debt to capital (including Minority Interests) was 85.2%, down from 87.0% at the end of Q1 2009.

Key highlights for the second quarter of 2009:

  • Total revenue reached AED 4.4 billion compared with AED 4.6 billion for the same period in 2008, a decrease of 4%.
  • Revenue from the electricity and water business, excluding supplemental fuel, increased by 14% to AED 1.6 billion, from AED 1.4 billion for the same period in 2008. This was primarily due to the expansion of Taweelah B and revenue from the Red Oak toll acquired in December 2008.
  • Revenue from oil and gas activities (including gas storage and other revenue) declined by 30% to AED 1.8 billion, compared with AED 2.5 billion for the same period in 2008 as a result of lower net realized oil and gas prices.
  • Cost of sales were AED 3.2 billion in 2009, an increase of AED 802 million (34%) over AED 2.4 billion in 2008. The increase was primarily driven by operating costs related to the Northern North Sea assets acquired in December 2008 and an increase of AED 407 million related to fuel costs (which are passed through to the offtakers).
  • Administrative and other expenses were AED 184 million in 2009 compared to AED 251 million in 2008. The decrease of 27% was attributable to lower foreign exchange rates as well as savings due to synergies.
  • Net profit, after minority interests, for the quarter was AED 136 million compared with AED 472 million in the same quarter in 2008. The decrease in net profit for the quarter is mainly attributable to lower commodity prices.
  • EBITDA was AED 2.0 billion for the second quarter of 2009, versus EBITDA of AED 2.9 billion in the same period in 2008.
  • Basic earnings per share were 2 fils for the quarter, compared with 11 fils for the same period in 2008.

Peter Barker-Homek, Chief Executive Officer of TAQA, said, "Our downstream performance has been exemplary, with average technical availability rising from 89% in Q1 to 97% in Q2. We also benefited from the consolidation of Red Oak, and the increased capacity of Taweelah B, which have boosted downstream revenues.

"We continue to drive operational excellence and this is reflected both in the confidence placed in us by our partners in the North Sea who have entrusted the operatorship of the Brent system to us, as well as the over AED 30 million of synergy savings we have achieved at TAQA North during the last six months alone.

"As the oil price has improved from its lowest point, our second quarter performance has shown an improvement in comparison to the first three months of the year. With the oil price trending up to over US $70 per barrel post-quarter, we are now a long way from the lows we saw earlier in the year. While performance of our upstream business is still lower than the same period in 2008, when oil prices were very strong, we have seen a welcome strengthening in business performance."

Upstream and Midstream

  • Upstream activity generated revenues of AED 1.7 billion (including gas storage and other revenue), 53% of total revenues and 62.2% of EBITDA.
  • Total production was 138.2 thousand barrels of oil equivalent per day (mboe/day) in the second quarter of 2009, split between TAQA North (92.8 mboe/day), TAQA Bratani (40.2 mboe/day) and TAQA Energy (5.2 mboe/day), up from 119.2 mboe/day in the second quarter of 2008.
  • TAQA Bratani has shown the greatest production increase, with production growing from 15.1 mboe/day to 40.2 mboe/day, an increase of 166% over the same period last year, showcasing the benefits of TAQA’s investment program.
  • TAQA North production declined by 4%, due to decreased capital investment as a result of lower gas prices.
  • Average net realized price of crude oil sold was US $53.12 per barrel for TAQA North and US $55.15 per barrel for TAQA Bratani.
  • Average net realized price for natural gas sold was US $3.45 per thousand cubic feet (mcf) for TAQA North, US $6.02 per mcf for TAQA Bratani and US$8.19 per mcf for TAQA Energy.

Finance

  • For the half, finance costs were essentially flat year on year at AED 1.9 billion. An increase related to new acquisitions in December 2008 and the breakage cost on early debt repayment at Jorf Lasfar Energy Company (JLEC) in 2009, was partly offset by lower interest rates on revolving debt.
  • A favorable AED 253 million change in value of derivatives is primarily from the Red Oak acquisition that was consummated in December 2008, contributed by higher contracted electricity prices and lower gas prices versus the period end prices in respect of transactions entered into during the period.
  • Loss on exchange was AED 143 million in 2009 compared with a gain of AED 71 million in 2008. Last year's gains were primarily from the repayment of the UK and US debt at TAQA North. The current year loss arose from exchange movements of Moroccan Dirhams and GBP against AED.
  • During the period, TAQA continued its bond buyback programme, with a AED 260 million gain recorded in 2009 from the buy back of its 2036 bonds of a nominal value of US $323 million. TAQA continues to evaluate the potential for further bond buybacks in the future.
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Brent Crude Oil : $54.33/BBL 0.81%
Light Crude Oil : $51.5/BBL 1.29%
Natural Gas : $3.75/MMBtu 1.35%
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