The Abu Dhabi National Energy Company (Taqa), with assets as diverse as oilfields in the North Sea and a power station in New Jersey, has turned its focus to integrating investments after a 64 per cent decline in net profits. The new strategy set by Carl Sheldon, the general manager, contrasts markedly with that of the former chief executive Peter Barker-Homek, who looked to buy energy assets whenever he saw a good deal.
The company's profits rose greatly as oil prices increased in 2007 and 2008, but came back to earth with the crash last year. The company will spend US$1.4 billion (Dh5.14bn) on new drilling and expansion of plants, and is looking to integrate its far-flung marketing and fuel-purchasing operations under one umbrella, Mr Sheldon said yesterday. "At the moment, as we're a relatively new company that has grown by acquisition, our commodity sales activities and our fuel purchase activities aren't integrated," he said.
"Our focus is very much on optimisation and integration of our existing businesses, on improving our operating metrics and on our capital spending programme, which is all about developing organic opportunities within our portfolio." Taqa will increase drilling for oil and gas on its tracts in Canada and the northern North Sea, expand its gas storage facility in the Netherlands and expand power plants in Morocco and Ghana, Mr Sheldon said.
The company was not looking to make major acquisitions or sell assets this year, he said, and aimed to reduce its debt ratio to 70 per cent in two years, from 81 per cent last year. As it develops the gas storage facility, known as Bergemeer, over the next four years the company has an opportunity to connect its North Sea gas wells with pipelines and power stations, he said, offering the prospect of an integrated value chain.
Mr Sheldon said the firm's diversified investments had helped it eke out a profit last year, as increasing revenues from electricity generation partially offset the decline in prices. Earnings per share were 3 fils, down from 36 fils in 2008. The company's new strategy offered "increasing visibility over the medium-term outlook", said Scott Darling, an analyst at Nomura. "While the company still needs to deliver on its financial and operational targets, we are increasingly more confident over the future for the business and its management team," Mr Darling wrote in a note.
The firm's share price rose 5 fils to Dh1.26 yesterday, after the board approved a dividend of 10 fils a share. @Email:firstname.lastname@example.org