Taqa doubles profits in third quarter

Dubai: Abu Dhabi National Energy Company PJSC (“TAQA”), a publicly listed company on the Abu Dhabi Securities Exchange (ADX: TAQA),  reported doubling of its net profits after minority interests to Dh537 million in the third quarter of 2011.

During the third quarter of 2011 TAQA generated total revenues of Dh6.2b, 19 per cent higher year-on-year, compared with total revenues of Dh5.2b in Q3 2010 Earnings before interest, tax, debt and amortisation (EBITDA) reached Dh3.7b.

"Key drivers for this strong performance were the impact of positive oil prices, plus the net impact of TAQA’s expanded Power & Water operations, and a small increase in global oil and gas production led by TAQA’s UK North Sea operations," the company said in a statement.

Total oil and gas revenues (including gas storage and other income) increased from Dh1.8b to Dh3.0b for Q3 2011. This 71 per cent increase, versus the same period last year, was driven by stronger crude oil prices, plus higher production in the UK North Sea.

Exceptional operational performance

Abdullah Saif Al Nuaimi, Vice Chairman of TAQA, said: “TAQA’s growth and exceptional operational performance is evident in this positive set of results, which reflect the continued commitment of the Board and management team in building TAQA into a world-class, diversified energy company”.

Total power and water revenues (excluding supplemental fuel income but including net liquidated damages) increased from Dh1.9 billion in Q3 2010 to Dh2b in Q3 2011.

This 4 per cent year-on-year increase was primarily due to the contribution from Fujairah 2, which was transferred to TAQA in the third quarter of 2010 and fully commissioned in January 2011, and Shuweihat 2 which began production in the second quarter 2011 and is expected to be fully commissioned by the end of November.

Domestic power plants

Supplemental fuel income decreased 24 per cent year-on-year due to lower use of alternative fuel supplies at TAQA’s domestic power plants. Fuel is charged to the plants at cost, so a decline in revenues does not impact TAQA’s profitability.

Other operating revenue increased to Dh282 million due to higher trade sales in 2011 compared to 2010.

Cost of sales increased 12 per cent from Dh3.3 billion to Dh3.7 billion. Within this, fuel expenses and gas storage costs were in line with revenues received. Operating expenses (which excludes fuel and gas storage costs) increased from Dh866 million for Q3 2010 to Dh1.4 billion in Q3 2011.

Expenses

However, this increase reflects the impact of inventory movements in the UK and Dutch North Seas. Underlying operational expenses were in line with TAQA’s budget despite operating in a more competitive market where overall operational costs are increasing.

Depreciation, depletion and amortisation increased 24 per cent, reflecting TAQA’s increased asset base, including Fujairah 2 and Shuweihat 2, plus higher production at TAQA’s UK North Sea fields.

Carl Sheldon, Chief Executive Officer of TAQA, said: “Global demand for fuel and power continues to grow, with Middle Eastern markets, in particular, demonstrating attractive supply/demand dynamics. TAQA’s operational excellence and experience positions us well to meet this demand".

Kurdish region of Iraq

"The recently announced WesternZagros deal in the Kurdish region of Iraq is an example of us growing our footprint in the IMENA region and entering new countries with attractive market dynamics, in line with our stated strategy.

“While delivering our growth strategy in the medium and long-term is the priority for TAQA, I am particularly pleased with our quarterly and nine month performance, which has been excellent on both a financial and operational level.”