• 15 Nov 2011
  • Global

TAQA Third Quarter 2011 Results

Strong financial results underpinned by robust operational performance and positive oil price environmentAbu Dhabi, UAE – Abu Dhabi National Energy Company PJSC (“TAQA”), a publicly listed company on the Abu Dhabi Securities Exchange (ADX: TAQA), today reported its third quarter 2011 operational and financial results.All amounts in AED million unless otherwise statedBrief summary of resultsDuring the third quarter of 2011 TAQA generated total revenues of AED 6.2 billion, resulting in EBITDA of AED 3.7 billion and Net Profit after Minority Interests of AED 537 million – more than double the profit for the same period last year.Key drivers for this strong performance were the impact of positive oil prices, plus the net impact of TAQA’s expanded Power & Water operations, and a small increase in global oil and gas production led by TAQA’s UK North Sea operations.CommentH.E Abdulla Saif Al Nuaimi, Vice Chairman of TAQA, said:”TAQA’s growth and exceptional operational performance is evident in this positive set of results, which reflect the continued commitment of the Board and management team in building TAQA into a world-class, diversified energy company.”Carl Sheldon, Chief Executive Officer of TAQA, said:”Global demand for fuel and power continues to grow, with Middle Eastern markets, in particular, demonstrating attractive supply/demand dynamics. TAQA’s operational excellence and experience positions us well to meet this demand. The recently announced WesternZagros deal in the Kurdish region of Iraq is an example of us growing our footprint in the IMENA region and entering new countries with attractive market dynamics, in line with our stated strategy.””While delivering our growth strategy in the medium and long-term is the priority for TAQA, I am particularly pleased with our quarterly and nine month performance, which has been excellent on both a financial and operational level.” Stephen Kersley, Chief Financial Officer of TAQA, said:”Once again, these results demonstrate the benefit we derive from TAQA’s diversified business model. With continued strong revenue growth and careful cost control, the third quarter characterises TAQA’s performance for 2011 so far.””Equally, we continue to manage our finances prudently. While our cash position remains strong and we have comfortable levels of undrawn credit facilities, we continue to watch the markets closely to ensure we prudently manage our re-financing obligations coming due in October 2012.”Financial summary: Q3 2011 versus Q3 2010Total revenues for Q3 2011 were AED 6.2 billion, 19% higher year-on-year, compared with total revenues of AED 5.2 billion in Q3 2010.Total Oil & Gas revenues (including gas storage and other income) increased from AED 1.8 billion to AED 3.0 billion for Q3 2011. This 71% increase, versus the same period last year, was driven by stronger crude oil prices, plus higher production in the UK North Sea.Total Power & Water revenues (excluding supplemental fuel income but including net liquidated damages) increased from AED 1.9 billion in Q3 2010 to AED 2 billion in Q3 2011. This 4% year-on-year increase was primarily due to the contribution from Fujairah 2, which was transferred to TAQA in the third quarter of 2010 and fully commissioned in January 2011, and Shuweihat 2 which began production in the second quarter 2011 and is expected to be fully commissioned by the end of November.Supplemental fuel income decreased 24% year-on-year due to lower use of alternative fuel supplies at TAQA’s domestic power plants. Fuel is charged to the plants at cost, so a decline in revenues does not impact TAQA’s profitability.Cost of sales increased 12% from AED 3.3 billion to AED 3.7 billion. Within this, fuel expenses and gas storage costs were in line with revenues received. Operating expenses (which excludes fuel and gas storage costs) increased from AED 866 million for Q3 2010 to AED 1.4 billion in Q3 2011. However, this increase reflects the impact of inventory movements in the UK and Dutch North Seas. Underlying operational expenses were in line with TAQA’s budget despite operating in a more competitive market where overall operational costs are increasing.Depreciation, depletion and amortisation increased 24%, reflecting TAQA’s increased asset base, including Fujairah 2 and Shuweihat 2, plus higher production at TAQA’s UK North Sea fields.Profit Before Tax was AED 1.5 billion, 123% higher year-on-year, due to higher revenues as a result of the oil price, higher production in the UK North Sea plus the positive impact of derivatives and foreign exchange.Net Profit After Minority Interests increased 146% year-on-year, totalling AED 537 million for Q3 2011, versus AED 218 million for Q3 2010.TAQA’s Net Debt/Capital ratio was 81% at the end of the third quarter reflecting higher total debt due to the transfer of the revenue-generating assets (Fujairah 2 and Shuweihat 2), plus decreased equity resulting from foreign exchange movements. Net Debt/EBITDA improved to 4.7 times for Q3 2011, versus 5.6 times at the end of Q3 2010.Operational highlightsPower & WaterTAQA’s Power & Water business performance continues to generate steady, stable cash flows, with a top-quartile performance for technical availability.TAQA produced 20,513 GWh of electricity and 57,272 MIG of water during Q3 2011, generating total revenues of AED 2 billion for the third quarter. The 4% increase in revenues compared to the same quarter last year reflects the contribution from Fujairah 2, operational from January 2011 and Shuweihat 2 which had partial production from May 2011. Global technical availability was 96% for the third quarter of 2011, once again reflecting the excellent performance of TAQA’s power assets.DomesticTAQA’s domestic portfolio of assets generated 16,865 GWh of electricity and 57,272 MIG of water during the third quarter of 2011, reflecting the additional capacity of Fujairah 2 and a partial contribution from Shuweihat 2.The first unit of the Shuweihat 2 plant was fully operational in July 2011. The second unit of the plant commenced production in July 2011 and is expected to reach full production by the end of November 2011.Supplemental fuel revenues decreased from the peaks recorded over the past 12 months as a result of slightly less demand for back-up fuel at TAQA’s UAE domestic assets.InternationalTAQA’s international power portfolio, which comprises of assets in Morocco, Ghana, India, Saudi Arabia and the USA, generated 3,649 GWh of power during the third quarter. International technical availability was 91%, a slight increase compared to the same period last year despite an outage at Takoradi in Ghana resulting from a generator rotor ground fault. The issue has now been fixed and the plant was fully back in service in early October.In Morocco, the expansion of the Jorf Lasfar plant is proceeding within budget and on schedule. Commissioning and takeover of units 5 and 6 is planned for the end of 2013 and early 2014, respectively.In India, TAQA signed a Memorandum of Understanding in June with Jyoti Structures Limited (Jyoti) to explore ways to collaborate in the power sector in India. Initially, TAQA and Jyoti will pursue the expansion of TAQA’s existing 250 MW power plant at Neyveli, which is expected to double in capacity through the construction of an additional 250 MW plant.Oil & GasTAQA’s Oil & Gas business comprises strong, well-resourced centres of excellence supporting a portfolio of assets with viable growth potential across North America, the UK North Sea and the Netherlands.Total Oil & Gas revenues, including gas storage and other operating revenues, were AED 3.0 billion for Q3 2011, an increase of 71% compared to Q3 2010. This uplift was driven primarily by the increase in realised crude oil prices and higher production in the UK North Sea.Total average global daily production for Q3 2011 marginally increased to 138.5 mboe/day, compared with 136.8 mboe/day in Q3 2010, within guidance for FY 2011.North AmericaProduction in North America was flat year-on-year primarily as a result of the cold weather issues experienced early in the year.UKProduction volumes in the UK North Sea averaged 43.5 mboe/day in the third quarter, an 8% increase compared to the same period last year due to two key additions.In July, TAQA announced first oil from its new field development in the UK North Sea, the Falcon field, following a record appraisal and development phase of just under two years.Also in July, TAQA completed of the first phase of its acquisition of the Otter field and at the same time has taken over as operator. The field is tied back subsea to the TAQA operated Eider platform. This is the first phase of the transaction which was signed between Total and TAQA in October 2010, which will eventually result in TAQA taking ownership of Total’s entire equity stake of 81% in production licenses for two blocks.NetherlandsProduction in the Netherlands averaged 7.6 mboe/day, a 10% decrease compared to the same period last year but within management guidance for the year.Regarding the Bergermeer Gas Storage project, following the Dutch Parliament approval of the project in Q2 2011, the Council of State suspended the final permits pending a review of the appeals. TAQA expects a final ruling on the appeals in early 2012.TAQA continues with the preparatory activities for the project, including cushion gas injection, contract awards and the 2011 open season for long-term capacity.During the quarter, the oil price continued to have a favourable impact on TAQA’s financial results.WTI oil price averaged $89.54/bbl for Q3 2011, compared with $76.96/bbl in the same period last year. Prices for Brent crude increased to an average of $112.09/bbl in Q3 2011, versus $76.21/bbl in Q3 2010.The North American natural gas prices remained consistent year-on-year, with NYMEX gas prices for Q3 2011 averaging $4.06/mmbtu, versus $4.24/mmbtu for the equivalent period in 2010.Post-period corporate developmentsIn October TAQA made three significant announcements:In November, TAQA announced the intention to acquire a 16.6% non-operated working interest in Blocks 210/29a and 210/ 30a in the Cladhan area of the UK Northern North Sea for a consideration of $54.8 million. The blocks are located 18 kilometers southwest of the TAQA-operated Tern platform, TAQA has also agreed to farm-in to Blocks 28/5, 29/1d and 28/10a located in the Central North Sea, which includes the Coaster prospect.- ENDS -For further information:
TAQA Investor Relations, Abu Dhabi
Tanis Thacker, Head of Investor Relations
+971 2 691 4933Mohammed Mubaideen, Investor Relations Manager
+971 2 691 4964
firstname.surname@taqa.comAbout TAQAwww.taqa.comAbu Dhabi National Energy Company (TAQA) is a global energy company majority owned by the Abu Dhabi Government and listed on the Abu Dhabi Securities Exchange. Main activities include their oil and gas business, power generation and water desalination across four continents.TAQA is one the largest independent power producer in the world and the majority owner of the facilities that provide 98 per cent of the water and electricity requirements in the Emirate of Abu Dhabi. TAQA’s power plants are located in the United Arab Emirates, Morocco, Oman, Saudi Arabia, Ghana, India, and the United States.With operations in Canada, the United Kingdom, the Netherlands and the United States, TAQA’s oil and gas business includes exploration and production, gas storage and pipeline transportation.Its entrepreneurial culture, along with a commitment to people, safety and the environment, has created strong foundations for the long-term sustainable growth of their business.Follow TAQA on Twitter: www.twitter.com/taqaglobal

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