- 10 Aug 2011
TAQA Second Quarter 2011 Results
Strong quarterly performance, Net Profit After Minority Interests of AED435 millionStrong liquidity and cash position with AED 4.0 billion in cash & casAbu Dhabi, UAE – Abu Dhabi National Energy Company PJSC (“TAQA”), a publicly listed company on the Abu Dhabi Securities Exchange (ADX: TAQA), today reported its Second Quarter 2011 operational and financial results.All amounts in AED million unless otherwise stated(1) Excludes supplemental fuel revenue and includes net liquidated damages in relation to Shuweihat 2(2) Includes Gas Storage and OthSummary of resultsTAQA posted a strong operational and financial performance for Q2 2011, benefitting from higher oil prices and a quarterly increase in UK production, along with higher Power & Water revenue from the Fujairah 2 plant. Combined with a steady cost control, this resulted in a Net Profit After Minority Interests of AED 435 million.In addition to a positive quarterly performance, TAQA has made progress on its key growth projects in Morocco, the Netherlands, Ghana and India.
TAQA’s cash position and liquidity remains strong with over AED 4.0 billion in cash and cash equivalents, plus AED 11.7 billion in undrawn facilities, as of 30 June 2011.CommentCarl Sheldon, General Manager of TAQA, said:“TAQA’s performance during the second quarter of this year has been strong – both operationally and financially. A consistent and solid operational performance combined with a more favourable commodity pricing has delivered a net result for the first six months of 2011 of which we can be proud. “Quarterly performance aside, we remain firmly committed to our longer term vision for growth across our key markets. We have made clear that our future will be largely driven by the organic growth opportunities we identify and harness in our existing footprint. Our asset base is already growing as a result of the success in our North American and UK North Sea drilling programmes and all other growth projects have made pleasing progress this quarter. In particular, construction started this year at Jorf Lasfar plant in Morocco for the 700 MW expansion. This combination of a positive quarterly performance, and continued investment in TAQA’s future, gives me confidence as we move through an exciting period in the company’s development.Stephen Kersley, Chief Financial Officer of TAQA, said:”During the quarter, steady production in our Oil & Gas business has enabled TAQA to capture the benefits of a higher commodity price environment, while carefully controlling operational expenditure. This was supported by higher contributions from the Power & Water business due to contributions from Fujairah 2. The result was an increase in gross profit which, in turn, had a direct and positive impact on our bottom line. “Consistent delivery against our internal targets continues to enhance our overall financial position. TAQA has good available liquidity and a strong cash position, leaving us with ample headroom to continue investing in our organic growth projects and the future of the company.”Financial SummaryTotal revenues for Q2 2011 were AED 7.1 billion, 38% higher year-on-year, compared with total revenues of AED 5.1 billion in Q2 2010.Total Oil & Gas revenues (including gas storage and other income) increased from AED 2.0 billion to AED 3.1 billion for Q2 2011. This 54% increase versus the same period last year was primarily driven by the increase in crude oil prices, plus higher production in the UK North Sea.Total Power & Water revenues, excluding supplemental fuel income, increased from AED 1.6 billion in Q2 2010 to AED 1.9 billion in Q2 2011. This 17% 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.Supplemental fuel income increased 38% year-on-year due to higher use of alternative fuel supplies at TAQA’s domestic power plants.Other operating revenue increased due to higher transportation revenues in Canada and the Netherlands.Cost of sales increased 25% from AED 3.7 billion to AED 4.6 billion. Within this, fuel expenses increased in line with supplemental fuel revenues. Operating expenses increased by 27%, while depreciation, depletion and amortisation increased 21% reflecting TAQA’s increased asset base.Profit before Tax was AED 1.4 billion, 151% higher year-on-year, due to higher revenues as a result of the oil price, plus tight control over operating expenses.Net Profit After Minority Interests increased 154% year-on-year, totalling AED 435 million for Q2 2011, versus AED 171 million for Q2 2010.Total debt and net debt increased year-on-year due to the transfer of interests at Fujairah 2 and Shuweihat 2. However, TAQA’s Net Debt/Capital ratio decreased to 79%. Net Debt/EBITDA reduced to 4.9 times for Q2 2011, versus 5.7 times at the end of Q2 2010.Operational HighlightsPower & WaterTAQA has grown to become the sixth-largest global independent power producer. Its Power & Water business performance continues to generate steady, stable cash flows, with a top-quartile performance for technical availability of power.TAQA produced 16,215 GWh of electricity and 53,280 MIG of water during Q2 2011, generating total revenues of AED 1.9 billion for the second quarter. The 17% increase in revenues compared to the same quarter last year reflects the contribution from Fujairah 2, operational from January 2011. Global technical availability was 96% for the second quarter of 2011, in line with the excellent performance of TAQA’s power assets in previous quarters.Domestic During the summer months, TAQA’s domestic Power & Water assets experienced an increase in demand for their services due to the seasonal effects of higher temperatures in the region.
Throughout this period of high demand, TAQA’s domestic power plants generated 12,576 GWh of power and desalinated 53,280 MIG of water. Technical availability was high at 97%, reflecting the quality of TAQA’s domestic power plants.Fujairah 2, TAQA’s newest plant, ran at 98% technical availability, generated 2,046 GWh of electricity and produced 5,143 MIG of desalinated water during the second quarter.Completion of the first of two phases at Shuweihat 2, a 1,500 MW and 100 MIGD plant, was originally scheduled for June but was delayed to mid-July. The first unit (750 MW, 50 MIGD) is now operational and the second unit (750 MW, 50 MIGD) is expected to be completed in October 2011. TAQA received liquidated damages of AED 60 million during Q2 2011 in relation to the slight delay to completion of the first unit. Fujairah 2, a 2,000 MW and 130 MIGD plant located in the UAE, achieved full commercial completion in January 2011, contributing revenues during the quarter for the first time.InternationalTAQA’s international power portfolio, which comprises of assets in Morocco, Ghana, India, Saudi Arabia and the USA, generated 3,639 GwH of power during the second quarter. International technical availability was 91%, a slight increase compared to the same period last year.In Morocco, the Jorf Lasfar plant has continued to perform at a high level of technical availability during the quarter, generating 2,633 GWh of electricity. The Jorf Lasfar 700 MW expansion project continued to progress to schedule with construction commencing on the major civil works for the project earlier this year. Commissioning and takeover of units 5 & 6 is planned for the end of 2013 and early 2014, respectively.In Ghana, TAQA’s rolling maintenance programme continued with two planned inspections during the quarter, plus three unplanned outages. Two of these were resolved, with one ongoing, for which the fault has been identified and the replacement machinery ordered. The outage has had some impact on technical availability for the plant and is expected to be fully resolved by OctoberOil & GasTAQA’s Oil & Gas business comprises strong, well-resourced centers of excellence supporting a portfolio of assets with viable growth potential across North America, the UK North Sea and the Netherlands.UKTotal Oil & Gas revenues, including gas storage and other operating revenues, were AED 3.1 billion for Q2 2011, an increase of 54% compared to Q2 2010. This uplift was driven primarily by the increase in realized crude oil prices and higher production in the UK North Sea.Total average global daily production for Q2 2011 increased 7% to 135.9 mboe/day, compared with 127.5 mboe/day in Q2 2010 and within guidance for FY 2011.North AmericaProduction in North America was slightly below expectations, yet remained consistent at 88 mboe/d. This was due to the harsher-than-normal winter, which caused delays in bringing new projects on-stream. Despite this, operational expenses in North America remained flat.During the second quarter, TAQA implemented a planned bi-annual shut down at the East Crossfield Gas Plant in Alberta, allowing for regular vessel inspections and general plant repairs that are not possible while the plant is operational. The shutdown ran from 29 April to 26 June, slightly longer than expected due to additional maintenance time and capital invested in upgrades, repairs and expansion of the plant process systems.After the close of the quarter, at the end of April, TAQA began a planned bi-annual shut down at the East Crossfield Gas Plant in Alberta, which is scheduled to last for one month.The shutdown allows for regular vessel inspections and general plant repairs that are not possible while the plant is operational.UKProduction volumes in the UK North Sea were 40.1 mboe/day in the first quarter, a 27% increase compared to the same period last year. This increase is primarily a result of more efficient operations, plus water injection issues in the comparable period for Q2 2010.TAQA’s drilling programme at its Tern platform in the UK North Sea continued during the quarter. Post-quarter, subsea pipeline work and tie-in for Falcon was completed post-quarter with the well opening on 15 July.NetherlandsProduction in the Netherlands averaged 7.8 mboe/day, a slight decrease compared to the same period last year.TAQA continued to progress the Bergermeer Gas Storage project during Q2 2011 with the announcement that all required statutory approvals and permits to construct and operate the facility have been signed by the appropriate authorities. This followed the Dutch Parliament’s approval of the project and recognition of Bergermeer Gas Storage as essential for the Netherlands’ security of supply. Post-quarter, the Dutch Council of State has subsequently stipulated that early construction work at the site must wait until final appeals have been heard. While disappointed about the delay, TAQA remains confident of a positive outcome of the appeals process.Commodity pricing environmentOil prices increased favorably during the quarter. WTI oil price averaged $102.34/bbl for Q2 2011 compared with $78.05/bbl in Q2 2010. Prices for Brent crude increased to an average of $116.99/bbl in Q2 2011 versus $79.41/bbl for the same period last year.Significant Activities in the QuarterCorporate updateBetween April and June 2011, TAQA announced two changes to its senior management team, as follows:On 19 May TAQA announced the appointment of Stephen Kersley to the role of CFO, with more than 20 years’ experience in the oil and gas industry with Shell, following Doug Fraser’s decision to return to Canada. On 28 June TAQA announced that H.E. Abdulla Saif Al Nuaimi, decided to step down effective 1 July from his executive positions at TAQA to allow him to concentrate full time on his role as Director General of the Abu Dhabi Water and Electricity Authority. General Manager, Carl Sheldon, is now leading TAQA and continuing to oversee the company’s strategic direction and global operations.Additionally, in June, TAQA secured a one-year extension to its existing CAD $1 billion revolving credit facility effectively extending the agreement to May 2014.Post-period corporate developments On 4 July, TAQA announced the completion 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 the two blocks.On 18 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.On 21 July, TAQA signed a Memorandum of Understanding 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.- ENDS -For further information:TAQA Investor Relations, Abu DhabiTanis Thacker, Head of Investor Relations and Corporate Communications
+971 2 691 4933Mohammed Mubaideen, Investor Relations Manager
+971 2 691 email@example.comCapital MS&LDubai – Maram Alkadhi on +971 4 367 6160London ¨C Claire Maloney / Anna Davies on +44 207 307 firstname.lastname@example.orgAbout TAQAwww.taqa.comTAQA is a global energy company majority owned by the Abu Dhabi Government and listed on the Abu Dhabi Securities Exchange.Its activities include oil and gas, power generation and water desalination across five continents. With operations in the UK, the Netherlands and North America, the company’s oil and gas business includes exploration and production, storage and pipelines. It produces almost 137,000 barrels of oil equivalent per day in the North Sea and North America, as well as operating and developing extensive gas storage facilities in the Netherlands.TAQA is the sixth largest independent power producer in the world. Its power plants are located in the United Arab Emirates, Morocco, Saudi Arabia, Ghana, India, and the United States. TAQA is the majority owner in the facilities that provide 98% of the water and electricity requirements in the Emirate of Abu Dhabi.Established in 2005, TAQA’s entrepreneurial culture has laid the foundations for long-term sustainable growth building on its commitment to people, safety and the environment.Follow TAQA on Twitter: www.twitter.com/taqaglobal