Abu Dhabi energy firm is back in the black as a result of high oil prices and cost cuts
Taqa swings to profit in 2017 after posting a record loss in 2016
Abu Dhabi National Energy Company or Taqa swung to a Dh171 million profit in 2017 thanks to higher energy prices and cost cuts that helped the firm recover from its record Dh19 billion loss in 2016.
"Higher hydrocarbon prices, together with sustained cost efficiencies, benefited our oil and gas business, while the power and water business continued to deliver a robust operational and financial performance," Saeed Al Dhaheri, acting chief operating officer said in a statement.
Taqa attributed its 2016 loss to an exceptional impairment charge of Dh22bn because of a deterioration in the value of assets mainly in North America, Europe and Iraq.
The Abu Dhabi Water and Electricity Authority, the majority shareholder in Taqa, last year filled the hole left in Taqa’s balance sheet by transferring land valued at Dh18.7bn from Adwea’s power and water plant sites, swallowing the entire loss of equity value itself, according to Taqa’s 2016 annual results.
Taqasaw output from its various concessions fall 8 per cent to 126,200 barrels of oil equivalent per day in 2017 due to natural decline, lower capex and planned maintenance on a North Sea platform.
The Abu Dhabi-headquartered firm has oil-producing assets in Canada and a majority stake in the Atrush field in the northern Kurdistan region of Iraq, from where it started oil production last July. Canada’s hydrocarbons industry has performed dismally over the last couple of years, although US producers have benefited from a shale oil and gas boom and an uptick in the number of drill rigs.
The firm confirmed it had received its first payments from the semi-autonomous Kurdistan Regional Government from Atrush, which has a 30,000 barrel-per-day production capacity.
Taqa's total revenues for the year increased three per cent to Dh16.7 billion, thanks to higher commodity prices and the steady performance of its power and water units.
The firm's earnings before interest, taxes, depreciation and amortisation stood at Dh9.5bn, up 11 per cent, "supported by higher revenues and sustained cash cost savings.”
Cash flow decreased by one per cent to Dh7.2bn because of increased capital investment to sustain performance of the group's existing portfolio of assets.
Taqa generated 89,846 Gigawatt hours of power globally, with more than 70 per cent of the production coming from the UAE. The firm also delivered 249,469 million Imperial gallons of desalinated water in Abu Dhabi.
The firm had liquidity of Dh15.4bn, which included Dh4.2bn in cash and cash equivalents as well as Dh11.2bn of undrawn credit facilities.
Taqa announced last month that it would transform its Eider platform in the North Sea to a utility platform in order to extend the life of the maturing oil and gas asset.