- 01 Apr 2015
TAQA reports full year 2014 results
ABU DHABI, United Arab Emirates – TAQA, the international energy company from Abu Dhabi, today announced its financial results for the year ended 31 December 2014.Driven by a strong performance, TAQA achieved underlying revenues of AED 23.0 billion in 2014, an 8.6% increase over 2013. This resulted in the Company’s highest ever EBITDA of AED 14.5 billion, resulting from record production of 158.9 thousand barrels of oil equivalent per day (mboed) (2013: 142.2 mboed) and 82,723 gigawatt hours (GWh) (2013: 76,712 GWh) of electricity.A net loss of AED 3.0 billion was recorded due to a post-tax, non-cash impairment of AED 3.3 billion, resulting from the structural change in commodity prices. To respond to the lower commodity price environment and preserve cash, TAQA reduced its capital expenditure for 2014 by 23% compared to 2013 and by another 39% (AED 2.5 billion) for 2015. The Company has also initiated a reduction in total cash costs of AED 1.5 billion over the next two years.“Despite the challenging price environment, we have delivered outstanding operational performance, achieving record production and cashflows, while enhancing the safety and reliability of our assets. We also successfully delivered two major projects safely, on time and within budget, and made significant progress at our third major project in the Kurdistan Region of Iraq,” said Edward LaFehr, Chief Operating Officer of TAQA. “Our improved operational reliability, combined with the success of our ongoing cost restructuring programme, has helped us to adapt to lower commodity prices and will create a stronger foundation on which to build, when markets recover.”Key figures* Does not include construction and backup fuel revenues, which have compensating expenses in cost of sales
+Includes other operating revenues, ++Includes gas storage and other operating revenuesFinancial resultsTAQA’s revenues and cashflow after investments improved following a year of strong operational performance. Total revenue grew 6.1% year-on-year to AED 27.3 billion, underlying revenue grew 8.6% to AED 23.0 billion, and EBITDA grew by 7.7% to a record AED 14.5 billion.TAQA reduced net debt by AED 2.7 billion in 2014. This has been achieved by the Company’s strong operating cashflows and non-core asset disposals with a value of AED 836 million.As at 31 December 2014, TAQA had available liquidity of AED 15.0 billion, including AED 11.5 billion of unused credit facilities and AED 3.5 billion of cash and cash equivalents.
However, the material drop in oil prices during the second half of 2014 had significant implications for the oil and gas industry. The impact of this reduction on the value of TAQA’s assets resulted in a non-cash, post-tax impairment of AED 3.3 billion and a net loss of AED 3.0 billion for the year.As a consequence of this loss, the Company will not pay a dividend for 2014.Corporate restructuring and transformationTo improve profitability and increase its focus on safe, reliable and efficient operations, TAQA introduced a new executive team and a simplified organisational structure based on a geographic model. This change eliminated a layer of executive management, improved communications and devolved responsibility directly to regional leaders, providing them with greater accountability and a clearer mandate.The Company reduced its capital expenditure for 2014 by 13% below budget, to AED 6.4 billion, and AED 2.0 billion less than 2013. As part of the new global transformation programme, TAQA plans to further reduce its 2015 capital expenditure by 39% to AED 3.9 billion compared to its 2014 capital expenditure. It also initiated a AED 1.5 billion reduction in all other costs over the next two years. These measures will help the Company maintain profitability in a low commodity price environment.EmiratisationTAQA remains committed to developing UAE nationals through various initiatives and development programmes. These have increased the number of UAE nationals in Abu Dhabi-based senior leadership roles from 18% to 43% over the past year.Oil and gasTAQA produced an average of 158.9 mboed in 2014, a record for the Company. This contributed to revenues of AED 13.9 billion, up 14% on 2013, and EBITDA of AED 7.7 billion, demonstrating strong operational cashflow.In North America, TAQA increased production by 2.6% to 89.5 mboed, while reducing capital expenditure and its unit operating cost by 6%. The Company focused its activities on its core acreage and continued to aggressively apply horizontal well, multi-stage fracking to dramatically improve its capital efficiency.TAQA’s UK North Sea operations recorded average production levels of 61.4 mboed, a 30% increase over 2013. This was due to the Harding acquisition, successful well intervention work, and top quartile operating efficiency, combined with a tight focus on safety and reliability across the asset base. In addition, TAQA successfully reduced its unit operating cost in the UK North Sea by 16% during the year.In the Netherlands, TAQA completed its Gas Storage Bergermeer facility and achieved full capacity today, on April 1, 2015.
The facility is already fully contracted for the 2015/2016 storage season. Separately, daily production from the Netherlands’ upstream assets averaged 8.0 mboed, introducing first oil from new offshore fields Amstel and Maas.TAQA completed the drilling of five wells at the Atrush development in the Kurdistan Region of Iraq and is progressing construction of the 30.0 mboed first-phase processing facility and related infrastructure.Power and WaterTAQA generated record electricity production of 82,722 GWh, reflecting the completion of its power plant expansion in Morocco, combined with strong technical availability of 91.2% across the fleet. This strong operational performance delivered underlying revenues of AED 9.0 billion, a 1.2% increase compared to 2013, resulting in EBITDA of AED 7.0 billion.Domestic power and water productionThe long-standing growth in demand for electricity in Abu Dhabi continued in 2014, with TAQA’s domestic assets generating a total of 58,941 GWh and desalinating a total of 260,100 million imperial gallons (MIG) of water. Technical availability was 91.8%, in line with top international standards.The expansion of the reverse osmosis water desalination facilities at Fujairah 1, which began in 2013, is now more than 85% complete. The expansion will increase the plant’s water desalination capacity from 100 million imperial gallons per day (MIGD) to 130 MIGD, of which 70 MIGD will be produced using reverse osmosis, making the plant one of the largest reverse osmosis desalination facilities in the Middle East.International power productionTAQA’s international power portfolio, consisting of assets in Morocco, Ghana, Saudi Arabia, India and the United States, generated a total of 23,723 GWh with a technical availability of 88.2%.The key development in 2014 was the successful delivery of the 700 MW expansion of the Jorf Lasfar power plant in Morocco. Jorf Lasfar is now the largest coal-fired power plant in the MENA region and generates over 50% of Morocco’s total electricity requirements.The commissioning of TAQA’s power plant in Takoradi, Ghana is expected in 2015. This will increase its net generating capacity from 220 MW to approximately 330 MW, with no increase in fuel consumption or emissions.The construction of TAQA’s 100 MW hydro-electric project at Sorang in northern India is progressing well and is expected to be commissioned in the second quarter of 2015.