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Taqa profits down 13pc on gas price.

Abu Dhabi National Energy Company (Taqa) reported a 13 per cent decline in net profits in the year ending December 31, 2012, reflecting a series of one-off items and a challenging price environment in North America.

The company, however, posted a 15 per cent increase in revenues underpinned by an outstanding performance in the power and water sector, it said.

Total revenues for 2012 were Dh27.8 billion ($7.566 billion), 15 per cent higher year-on-year, compared with total revenues of Dh24.2 billion in 2011. Cost of sales, excluding construction expenses, were Dh16.3 billion in 2012, an increase of 5 per cent.

Profit before tax was Dh3.5 billion in 2012, 14 per cent lower year-on-year than Dh4.1 billion in 2011, due to lower revenues from Oil & Gas, principally due to lower North American gas prices and higher finance costs.

Profit for the period (after minority interests) was Dh649 million, a decrease of Dh95 million compared to Dh744 million in 2011. The decline was principally driven by lower operating profit, offset in part by the gains recognised on assets disposal conducted during the period.

Basic and diluted earnings per share attributable to equity holders of Taqa is 11 fils.

In Power & Water, Taqa delivered a strong operational performance with very high availability and low forced outage rates, firmly placing it among the top performers globally. Its organic expansion plans are also progressing apace, with Jorf Lasfar Units 5 & 6 now 80 per cent complete and on budget, a statement said.

Similarly, the expansion project at Takoradi, Ghana, is now under way with all approvals secured and construction in progress.

Taqa also entered into two new markets during the year, having signed a Memorandum of Understanding with EUA[euro]NCi, the Turkish national power company, in respect of a major project in Southern Turkey, and investing in a 1,000 MW power plant in Sulaymaniyah in the Kurdistan region of Iraq.

In the UK North Sea, despite some operational challenges, including unplanned shutdowns which impacted performance, Taqa benefited from the buoyant Brent oil price and a number of acquisitions during the year. The most significant being the agreement to acquire from BP a range of assets in the Central North Sea, together with associated subsea infrastructure, it said.

To help address the on-going weak market conditions for natural gas in North America, non-core North American acreage was sold, new acreage was acquired in Taqa's core production region and uneconomic production shut-in. In the last quarter of 2012, natural gas prices recovered somewhat and have maintained an upward trend since, the statement said.

Reflecting Taqa's broader focus on the Mena region, it acquired a majority stake in the Atrush exploration block in the Kurdistan region of Iraq - its first operated oil and gas asset in Mena.

During the course of 2012, Taqa completed several landmark financing transactions, including its maiden Sukuk issuance, and the largest non-sovereign $-denominated issuance from Mena in 2012.

Carl Sheldon, chief executive officer of Taqa, said: "This was a resilient set of results, supported by the exceptional performance of our power business, where we have not only delivered a strong operational performance, but have also made significant progress with key organic growth projects in Morocco and Ghana. We have also expanded our footprint into two new markets: Turkey and Iraq, and are now firmly established as the regional development partner of choice.

"While we have continued to endure a tough pricing environment in North America, there is reason for some optimism, as prices have recovered from their low point and more positive pricing momentum has been sustained through the last quarter of 2012 and first quarter of 2013. Nonetheless, we have taken decisive action to restructure our North American business, shutting in uneconomic production, selling non-core acreage, and refocusing investment capital. Similarly, in the UK, our pending acquisition of assets from BP will not only give us attractive production, but will also diversify our production footprint into a new region of the North Sea. These steps position us well for the future."

Stephen Kersley, chief financial officer, said:

"One of Taqa's key achievements during the year was to secure long term financing at very attractive prices - both on a corporate level, as well as at our key projects, such as Jorf Lasfar and Takoradi. We are committed to proactively managing our financing needs to ensure that we have the most appropriate capital structure to underpin our future profitability."

Power & Water revenues, excluding supplemental fuel and construction revenues, grew by 9 per cent to Dh8.5 billion from Dh7.4 billion in 2011. The increase in revenues was driven by greater available capacity from the Shuweihat 2 plant, which commenced phased operations in July 2011, combined with continued high levels of technical availability across the entire fleet. Construction revenues from the Jorf Lasfar 5 & 6 and Takoradi projects of Dh3.6 billion were offset by construction costs of Dh3.5 billion, leaving a profit margin of Dh76 million.

Supplemental fuel income decreased 24 per cent year-on-year to Dh3.6 billion, due to significantly lower use of alternative fuel supplies at Taqa's domestic power plants.

Total Oil & Gas revenues (including gas storage and other income) were stable at Dh12.0 billion for 2012. This was driven by lower production across all our producing regions and continued weak North American gas prices, offset by higher sales at Bergermeer, which saw other operating revenue grow by Dh357 million.

Oil & Gas expenses rose from Dh3.6 billion in 2011 to Dh5.0 billion in 2012, principally due to stock movements (Dh829 million), and higher repair and maintenance costs in the UK, mainly due to the Otter acquisition. Oil & Gas DD&A expense was flat at Dh3.7 billion in 2012. - TradeArabia News Service

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Publication:TradeArabia (Manama, Bahrain)
Date:Mar 13, 2013
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