Taqa's Q3 earnings slip on weak oil

Abu Dhabi - Firm cuts oil and gas headcount by 24%, headquarter jobs axed 39%.

Abu Dhabi National Energy Company, or Taqa, suffered a net loss of Dh201 million in the quarter ended September 30 against a net profit of Dh320 million in the same period last year, as oil prices plunge more than 50 per cent.
In the nine-month period, the energy company reported Dh581 million loss from a net profit of Dh620 million.
The energy company, which has stakes in water and power generation, hydrocarbons suffered on account of weak oil prices since July last year. The WTI has dropped to $46.48 a barrel from $97.60 a barrel in the same period however, Brent crude oil has plummeted to $50.15 a barrel from $102.18 a barrel, showing the significance of the drop, in the last 15-months.
In the quarter, total revenues dropped to Dh4.829 billion from Dh6.927 billion, the energy company in a regulatory statement to Abu Dhabi Securities Exchange. "The decrease in income mainly relates to the material reduction in realised oil prices," Taqa said. Cash generation from the company's power and water operations remained solid, it said. Taqa has responded to the drop in oil prices by reducing capital spend by 43 per cent, continuing significant cost reductions and increasing efficiencies across its global operations, the company statement said. The Company's Transformation Program has generated total saving of Dh1.1 billion during the first nine months of 2015. It is ahead of its targeted annual savings of Dh550 million in 2015 and Dh1.5 billion by the end of 2016. The global oil and gas headcount has been cut by 25 per cent since July 2014, while Abu Dhabi headquarters headcount by 39 per cent, Taqa said.
Edward LaFehr, chief operating officer said during the first three quarters, he continued to position Taqa to withstand the current low commodity price environment.
"Consistent with our commitments, we continue to drive cost transformation," he said which has saved Dh1.1 billion.
"We have reduced capex by 43 per cent in the first nine months. This, combined with our focus on the safety and reliability of our asset base, positions us well to maintain cash-flow and strong financial liquidity in the current oil price environment," he said.
Hoever, Taqa had an exceptional power generation business in the period he said, adding "We are working hard to transform the oil and gas portfolio such that we can take advantage as prices recover."
Taqa's oil and gas production decreased by nine per cent to 144,900 barrels of oil equivalent per day (boepd), from 158,500 boepd, in the same period last year. The decrease is a result of natural decline, reduced capital investment and third-party pipeline restrictions in Canada, offset by higher production efficiency globally and a successful well intervention program in the UK.
The company has reduced unit operating costs by 40 per cent in the Netherlands and 18 per cent in the UK and North America. The Company's power assets generated 11.6 per cent more electricity year-on-year to 61,418 megawatt-hours (MWh) driven by strong performance in the UAE and Morocco. Water desalination facilities output rose 91.6 per cent to 191,674 million imperial gallons (MIG) in line with 2014 production. Taqa has completed three of its six major projects. The 4.1 billion cubic meter Bergermeer gas storage in the Netherlands, the expanded 330 MW Takoradi T2 power plant in Ghana and 100 MW Sorang hydro plant in northern India started production.
In the fourth quarter, Taqa will bring on-stream its UK North Sea Cladhan project which will produce an initial 10,000 boepd. In the UAE, the 30 MIGD expansion of its Fujairah water plant is expected to start up before year end.
The first phase of Taqa's Atrush project in the Kurdistan Region of Iraq is scheduled to produce first oil in 2016 with production expected to reach 30,000 boepd gross.
- haseeb@khaleejtimes.com