- 10 Aug 2016
2016 first-half results
ABU DHABI, United Arab Emirates – Abu Dhabi National Energy Company PJSC (TAQA) today announced its results for the first half of 2016.Highlights: Saeed Al Dhaheri, Acting Chief Operating Officer said: “Our businesses have continued to demonstrate improving operational performance. Despite achieving significant costs reductions, including a 73% cut in capex, we safely maintained oil and gas volumes and increased power production above our previous record highs. The cost transformation programme has continued its momentum achieving more than AED 6.5 billion in savings since it started in 2015.
The highly successful $1 billion bond refinancing reduced our annual corporate interest payments by AED 70 million, and our free cash flow has continued to grow during the period. While our realised oil and gas prices dropped by 39%, the upstream business has adapted to the changes and continued to transform into a more resilient business able to compete in this tough environment.” FinancialsRevenues and EBITDA were down 19% and 21% respectively to AED 7.9 billion and AED 4.1 billion in the first half of 2016. This was due primarily to the 39% drop in realised oil and gas prices and resulted in a net loss of AED 1.2 billion compared to a net loss of AED 165 million in H1 2015. Net profit was also negatively impacted by the absence of the one-off AED 555 million UK tax credit booked in H1 2015.
During the second quarter, the Company completed a $1 billion bond issuance, comprising two $500 million tranches with tenors of five and ten years. The proceeds will be used to repay the $1 billion bond due to mature in October of this year, but more importantly will reduce financing costs by approximately AED 70 million per year. As at 30 June 2016, the Company’s available cash, cash equivalent and undrawn credit facilities totalled AED 15.6 billion, up 14% compared to the same period last year.Despite continuing low oil and gas prices, free cash flow increased 35% to AED 3.1 billion in the first half of 2016. The increase compared to the first half of 2015 was led by reductions in capital expenditure, cash costs and tax payments.Cost transformationTAQA has achieved more than AED 6.5 billion in cash cost and capex savings under its cost transformation programme which was launched in 2015.In the first half of 2016, the cost transformation programme reported a further 14% of cash cost savings, equivalent to AED 458 million, driven primarily by efforts made across the oil and gas businesses.
The programme has now generated opex and G&A savings totalling over AED 2 billion over the last 18 months.Capital expenditure for H1 2016 was reduced by AED 1.3 billion or 73% compared to H1 2015. This was due to the completion of major projects in 2015 as well as cutting discretionary investment.Power & Water operationsThe Company increased its power production by 6% to a record high of 39,090 gigawatt hours while technical availability increased to 92%. Water volumes decreased slightly to 121,650 million imperial gallons due to planned maintenance. The higher availability is partly attributable to the optimisation of maintenance programmes throughout the fleet. Oil & Gas operationsDespite significant cuts in capital expenditure, TAQA minimised the decline in production and produced 147.4 thousand barrels of oil equivalent per day (mboep/d), only 2% less than in H1 2015.Strong well performance and easing of third-party pipeline capacity restrictions helped TAQA increase production in North America by nearly 5% to 84.2 mboep/d. TAQA also sold all storage capacity at its 46 terawatt-hour Bergermeer gas storage facility in the Netherlands for the 2016-2017 storage year.TAQA reduced per barrel equivalent operating costs by 22% to $21.56 in Europe and 16% to $7.33 in North America as at 30 June 2016. Leadership successionThe Company appointed Saeed Al Dhaheri as Acting Chief Operating Officer as of 22 June 2016. Having joined the Company in 2014, Mr Al Dhaheri has been part of the executive team leading the global reorganisation and cost transformation programme.S&P credit ratingIn April S&P Global Ratings affirmed TAQA’s credit rating at ‘A’ (outlook stable), noting ongoing support from the Abu Dhabi government to TAQA. Moody’s Investor Service rates TAQA at ‘A3’.