Taqa announces its financial results for Q1 2012
Abu Dhabi National Energy Company PJSC (Taqa), a publicly listed company on the Abu Dhabi Securities Exchange (Taqa), reported its Q1 2012 operational and financial results.
United Arab Emirates: Thursday, May 10 – 2012Carl Sheldon, Chief Executive Officer of Taqa, said, “The first quarter of 2012 has seen steady performance from our portfolio of assets, against the backdrop of a stronger global oil price and weak North American gas prices. This performance has seen revenues and EBITDA grow by 5%, and our profit before tax, which incorporates the benefit of asset disposals, jump by 46%.”
Sheldon said, “We remain focused on our strategy of delivering organic growth with our key projects, such as the expansion at Jorf Lasfar in Morocco, where construction of Units 5 and 6 continued on time and budget, and at Bergermeer gas storage, where last week we secured final approval from the Dutch Council of State to proceed with construction. In addition to this organic growth, we continue to seek ways of streamlining and enhancing our portfolio, and during the quarter this included the monetisation of non-core land holdings in North America at an attractive price, and acquiring acreage adjacent to our facilities in the UK North Sea.”
“As a respected global operator, we are increasingly seeing more and more opportunities and the joint venture agreement that we signed with Mass Global Investments Company Limited in the Kurdistan region of Iraq to acquire a 50% stake in a 1,000 MW power station at Sulaymaniyah reflects this,” he added.
Stephen Kersley, Chief Financial Officer, said, “We have seen our financial performance boosted during the quarter by our new capacity at Fujairah 2 and Shuweihat 2 contributing to 5% growth in our EBITDA year on year. We continue to enjoy record levels of liquidity with nearly Dhs20bn available to the business and with no significant short term refinancing requirements. While relatively small, our recent maiden Malaysian Ringgit sukuk is indicative of the increasing optionality we have in respect of financing.”
Financial summary: Q1 2012 versus Q1 2011
Total revenues for Q1 2012 were Dhs5.7bn, an increase of 5% compared with Q1 2011.
Total Power & Water revenues (excluding supplemental fuel income but including other operating revenues) increased from Dhs1.7bn in Q1 2011 to Dhs1.9bn in Q1 2012. This 13% year-on-year increase was primarily due to the contribution from Fujairah 2 and Shuweihat 2.
Supplemental fuel income increased 4% year-on-year due to higher fuel prices at the international plants, notably Jorf Lasfar and Takoradi, and was partly offset by lower fuel revenues at the U.A.E. subsidiaries due to lower use of back up fuel.
Total Oil & Gas revenues (including gas storage and other income) was flat at Dhs2.9bn in Q1 2012. This reflects continued strong production and oil prices in the UK North Sea, offset by weaker North American gas prices.
Total cost of sales increased by 3% to Dhs3.5bn from Dhs3.4bn in Q1 2011. Fuel expenses were Dhs959m in the first quarter of 2012 compared with Dhs925m in 2011. Increases were mostly due to higher fuel prices at Jorf and Takoradi, and were partly offset by reductions at U.A.E. subsidiaries due to lower use of back up fuel in the current year.
Operating expenses for Power & Water (which excludes fuel costs) increased from Dhs386m for Q1 2011 to Dhs417m in Q1 2012 due to the addition of Shuweihat 2.
Oil & Gas operating expenses, including gas storage expenses, decreased from Dhs844m in Q1 2011 to Dhs825m in Q1 2012 due to lower costs in North America mainly due to lower volume, offset by higher labour expenses in the UK North Sea and stock movements in the Netherlands.
EBITDA during the period increased 5% in Q1 2012 to Dhs3.4bn. The increase was driven by strong performances in our domestic power business, primarily through the contribution of Fujairah 2 and Shuweihat 2, and in our UK and Netherlands oil and gas businesses, in part offset by the impact of weaker gas prices in our North America business.
Depreciation, Depletion and Amortisation (“DD&A”) expenses for Power & Water were Dhs447m in Q1 2012 compared with Dhs386m in Q1 2011, principally due to Shuweihat 2. For Oil & Gas, the DD&A expense was effectively flat, at Dhs892m in Q1 2012.
During the period, Taqa disposed of certain non-core assets in Canada which resulted in a gain upon disposal of Dhs378m. In addition, Taqa had a bargain purchase gain of Dhs92m as a result of the change in fair values between the economic date of its initial agreement to acquire the Otter field in the UK North Sea (1 September 2009) and the legal completion date when purchase accounting was applied.
Finance costs increased from Dhs1.1bn in Q1 2011 to Dhs1.3bn in Q1 2012, largely due to the addition of the project financing related to the completion of Fujairah 2 and Shuweihat 2.
Profit Before Tax was Dhs1.4bn in Q1 2012, 46% higher year-on-year than Dhs961m in Q1 2011, due to higher revenues as a result of the higher oil price, stronger production in the UK North Sea, the increased power revenues due to Shuweihat 2 and Fujairah 2, and the gain on the disposal of North American non-core assets.
Taqa’s income tax expense was Dhs724m in 2012 compared to Dhs650m, an effective tax rate of 52% in Q1 2012, compared with 68% in Q1 2011.
Net Profit After Minority Interests increased by 251% year-on-year, to Dhs534m for Q1 2012, versus Dhs152m for Q1 2011.
Taqa’s Net Debt/Capital ratio was 78% at the end of the period and Net Debt/EBITDA improved to 5.0 times.
Financing:
Year on year total debt has remained stable at Dhs74.0bn whilst overall Net Debt decreased by Dhs1.3bn in part due to the cash proceeds received from the disposal of non-core Canadian acreage.
Consolidated cash on hand as at 31 March 2012 was Dhs5.2bn, compared with Dhs4.4bn at the end of Q1 2011. Taqa had unused credit lines of Dhs14.7bn at the end of Q1 2012, compared to Dhs7.3bn at the end of Q1 2011, and total available liquidity of Dhs19.9bn compared to Dhs11.7bn for Q1 2011.
On 26 February 2012, MYR650m ($215m) was issued under the MYR3.5bn ($1.1bn) Sukuk programme Taqa had established in November 2011. The 10 year Sukuk was raised with a profit rate of 4.65% with a full swapped rate to US Dollars of 5.3%.
Operational Review:
1. Power & Water
Taqa’s Power & Water business performance continues to generate steady, stable cash flows, with a top-quartile performance for technical availability.
Taqa produced 14,172 GWh of electricity and 54,114 MIG of water during Q1 2012, generating total revenues of Dhs1.9bn. The 13% increase in revenues compared to the same period last year, reflects the contribution from Shuweihat 2 which was fully operational in October 2011. Global technical availability was 91.3% for Q1 2012.
Domestic
Taqa’s domestic portfolio of assets generated 9,075 GWh of electricity and 54,114 MIG of water during Q1 2012, reflecting the additional capacity of Shuweihat 2, which was completed in October 2011, adding 1,500 MW of power generation and 100 MIGD of water desalination capacity. Domestic availability was 90.8%.
International
Taqa’s international power portfolio, which comprises of assets in Morocco, Ghana, India, Saudi Arabia and the United States, generated 5,097 GWh of power during the year. International technical availability was 93.4%, higher than the same period last year.
In Morocco, construction is proceeding at Units 5 and 6 of the Jorf Lasfar plant within budget and on schedule. Commissioning and takeover of Units 5 and 6 is planned for the end of 2013 and early 2014, respectively.
2. Oil & Gas
Taqa’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 Dhs2.9bn for Q1 2012, flat compared to Q1 2011. This was driven primarily by the increase in realised crude oil prices in the UK and Dutch North Sea, offset by lower North American gas prices. Total average global daily production for Q1 2012 decreased to 134.2 mboe/day, compared to 138.8 mboe/day in Q1 2011.
– North America
Production in North America decreased slightly year-on-year at 86.3 mboe/day, reflecting the divestment of approximately 4.0 mboe/day that closed in early March. Taqa sold non-core acreage in North America for a total of Dhs1,717m, resulting in a gain of Dhs378m, which is recognised in the consolidated income statement.
– UK
Production in the UK North Sea averaged 41.0 mboe/day during the quarter, 3% lower than the first quarter of 2011 due to the overrun of a planned shutdown at Cormorant Alpha, as well as some technical issues at North Cormorant and Pelican that affected production. These issues have now been resolved and production has returned to budgeted levels.
In February 2012, Taqa announced two farm-in agreements with a subsidiary of Fairfield Energy Limited for oil and gas licences in the UK North Sea. The agreements will result in Taqa, acquiring a 50% interest in licences P184, P474 and P1634, which include the Darwin oil discovery and prospective exploration acreage south of Darwin. The licences are located next to the Taqa operated North Cormorant and Pelican fields in the Northern North Sea.
Also in February, Taqa acquired a further 50% interest in the Otter field, to add to the 31% already held. Otter is tied back to Taqa’s Eider platform.
– Netherlands
Production in the Netherlands averaged 6.9 mboe/day, a 24% decrease compared to the same period last year due natural declines.
During the quarter, Taqa commenced its onshore exploration campaign with the first of four proposed targets drilled near Alkmaar, the Netherlands.
Commodity price environment
During the quarter, the oil price continued to have a favourable impact on Taqa’s financial results, although this was offset by weaker North American gas prices.
The WTI oil price averaged $104.03 in the first quarter of 2012, compared with $94.60 for the same period in 2011. Prices for Brent crude increased to an average $118.45 for the first quarter, up from $105.52 for the same period last year.
NYMEX gas prices for Q1 2012 averaged $2.50, compared with $4.20 for Q1 2011.
Post-period corporate developments
On 8 April 2012, Taqa signed a joint venture agreement with Mass Global Investments Company Limited, Under the agreement, Taqa will acquire a 50% interest in the 1,000 MW gas fired IPP situated near Sulaymaniyah, in the Kurdish region of the Republic of Iraq. The power plant has been operating from 2009 and has a capacity of 750 MW with additional 250 MW under construction. The transaction is subject to the fulfilment of certain conditions.
On 8 April 2012, Taqa successfully completed the sale of all its holding in Tesla Motors for a total consideration of Dhs956m ($260m) realizing a gain of Dhs415m.
On 2 May 2012 the Dutch Council of State delivered its judgment upholding the central government’s land-use plan for the Bergermeer Gas Storage facility. The Council of State ruling is not appealable and the project will now go ahead.
Notes and media contacts
About Taqa:
Established in 2005, Taqa is a diversified international energy group headquartered in Abu Dhabi, the capital of the United Arab Emirates, and listed on the Abu Dhabi Securities Exchange (ADX: Taqa).
Taqa’s business is made up of three operating divisions spread across the entire energy value chain: power generation & water desalination; oil and gas exploration & production; and emerging & alternative energy technologies.
Power & Water: Taqa is one the largest independent power producers in the world and the majority owner of the facilities that provide 98% of the water and electricity requirements in Abu Dhabi. Taqa’s power plants are located in the UAE, Morocco, Oman, Saudi Arabia, Ghana, India, and USA.
Oil & Gas: with operations in Canada, UK, the Netherlands, USA and Iraq, Taqa’s oil and gas business includes exploration and production, underground gas storage and pipeline transportation.
Emerging & alternative energy technologies: Taqa Energy Solutions is dedicated to alternative and technology-driven energy initiatives for long-term efficient energy production and generation.
Taqa’s vision is to deliver ‘Energy for Growth’: growth within the business; social and economic progress in the communities where Taqa operates; and increased value for our shareholders.
Over the past 40 years the UAE and Abu Dhabi have pursued a vision embodied by progressive development, investment and the highest global standards. Taqa is proud to align its strategy both domestically and globally to Abu Dhabi’s economic vision 2030, working towards sustainable economic development.
For more information about Taqa visit: www.taqaglobal.com.
For further information:
Tanis Thacker
Head of Investor Relations
Taqa Investor Relations, Abu Dhabi
Tel: +971 2 6914933
Mohammed Mubaideen
Investor Relations Manager
Taqa Investor Relations, Abu Dhabi
Tel: +971 2 6914964
Allan Virtanen
Head of Corporate Communications
Taqa Media Relations, Abu Dhabi
Tel: +971 2 6914894
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