x Abu Dhabi, UAESaturday 20 January 2018

Profits at Abu Dhabi's Taqa slump 80%

Shut in at Taqa's North Sea operations contributes to first quarter earnings decline.

Rig drilling at the Atrush 3 exploration well in Kurdistan. Courtesy Taqa
Rig drilling at the Atrush 3 exploration well in Kurdistan. Courtesy Taqa

Taqa's first quarter earnings slumped as oil production in the North Sea remains shut in since January.

Profit at the government-controlled investor, also known as the Abu Dhabi National Energy Company, declined by 80 per cent to Dh106 million. Year-on-year comparisons are skewed by income from divestments made early last year.

Revenues dropped by 6 per cent to Dh5.4bn.

The shut-in at the Cormorant Alpha platform in United Kingdom water will continue to deprive the company of up to 10,000 barrels per day (bpd) over the coming months.

"I suspect it will be shut in for months. It wouldn't be unrealistic to say up though the third quarter for our own production," said David Cook, Taqa's head of oil and gas.

The platform is undergoing an inspection and repairs programme after oil leaks in January and March, preventing Taqa from pumping crude at its South Cormorant field.

After the first leak, a pipeline leading through the platform was closed, keeping 90,000 bpd - or about 10 per cent of Brent - off the market. The Taqa-operated pipeline has since resumed its exports, with only the company's production shut in.

Acquired from 2007 onwards, Taqa's North Sea assets are mature fields with infrastructure that has been in service for decades.

"The idea is to make the repairs in a way that leaves the issue behind us," said Carl Sheldon, Taqa's chief executive.

Overall revenues from oil and gas declined by 17 per cent to Dh2.4bn. In the UK, production fell by 30 per cent to about 29,000 bpd during the first quarter.

The wide discrepancy between first quarter earnings in 2012 and 2013 is also attributable to income from sell-offs received early last year. Taqa made Dh378m from the sale of gas production assets in Canada in the first quarter of 2012. It received another Dh92m as a payout after the value of the Otter field in British waters changed between the initial purchase agreement in 2009 and the completion of the acquisition.

Last year, depressed natural gas in North America stunted earnings, as prices crumbled due to increased supply from shale gas production. Taqa responded with the asset sell-off, only to witness a resurgence in prices.

"Stronger natural gas prices in North America position us well to take advantage of our large land position and prospects in western Canada," said Mr Sheldon.

Taqa is moving ahead with its operations in the Kurdish region of Iraq, where it this week submitted a field development plan for the Atrush block to the Kurdish Regional Government. Once the plan has been accepted, Taqa can begin work to start production at the field.