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TAQA sees 9-mnth net profit tumble as lower prices take a toll

Nov 07, 2019
3 min read
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Abu Dhabi National Energy Company (TAQA) reported a sharp drop in nine-month net profits to as revenue and oil prices took a hit.

Consolidated net income fell 21 per cent to AED925 million with TAQA’s share of net profits down 54 per cent to AED 198 million compared to the nine-month period last year, TAQA said in a statement.

Its revenues were 9 per cent lower at AED 4.4 billion for the Oil and Gas segment due to lower volumes and realised prices in Europe, TAQA said, despite global power technical availability averaging 94.5 per cent with oil and gas production up 1 per cent to 123,322 barrels of oil equivalent per day (boepd).

The group also reported AED 7.0 billion in EBITDA, a 5 per cent reduction compared to the previous year, mainly driven by lower revenue along with reduced income from associates due to one-off insurance proceeds at Sohar Aluminium in 2018.

Saeed Mubarak Al Hajeri, Chairman of TAQA, said: “TAQA’s results for the first nine months of 2019 come amid headwinds for the hydrocarbon industry and continue to be bolstered by strong and stable performance in our Power and Water business. Moving forward, we remain positive about greater opportunities to grow our power generation and water desalination business to achieve sustained growth.”

The group’s overall capex marginally increased to AED1.2 billion for the period, consistent with 2018 spend.

Oil & Gas capex included bringing new wells on stream at TAQA Atrush and carrying out debottlenecking work to increase the capacity of volumes that can be handled by the production facility.

TAQA’s entitlement production has now reached 6,345 boepd for the nine month period ended 30 September 2019, a 102 per cent increase from 2018. Contributions to both revenues and EBITDA from the Atrush asset have increased significantly, up 95 per cent and 106 per cent respectively to AED357 million and AED222 million.

Consolidated net profit was negatively impacted by unfavourable mark-to-market movements generated by an energy price reduction and the reimplementation of the regional greenhouse gas initiative in New Jersey which impacted Red Oak, the Group’s US-based power asset.

This was offset by positive movements in foreign exchange gains which were realised as a result of a weaker Euro and a reduction in current tax charges due to the decrease in taxable income within the Oil and Gas segment.

TAQA’s liquidity as of 30 September 2019 remained strong at AED 11.2 billion, including AED 2.2 billion in cash and cash equivalents and AED 8.9 billion of undrawn credit facilities. This reflected September’s redemption at maturity of TAQA’s $500 million bond carrying a 6.250 per cent coupon that was later refinanced in early-October with a new bond of the same value, carrying a reduced coupon of 4.000 per cent and due for repayment in 2049.

The group continued its substantial progress in reducing debt, with a decrease of AED 3.0 billion over the last nine months, which brings the group’s debt to AED 63.3 billion at the end of the period.

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