The company said profit attributable to equity holders of the parent was Dh77 million in the first three months of the year, compared with a loss of Dh608m in the same period last year.
The profit was the first for Taqa since the first quarter of 2015, which even then was flattered by a tax credit.
“The transformative cost-reduction initiatives are now sustainably embedded across the organisation and with the balance sheet stabilised,” said Saeed Al Dhaheri, Taqa’s acting chief operating officer.
Taqa’s shares climbed by 12.5 per cent on the Abu Dhabi Securities Exchange yesterday to 63 fils, their highest level since October.
The past two years for Taqa have been marked by steep cost-cutting, which has meant the loss of 1,000 jobs and cutting capital expenditure to the bone.
Taqa reported that its operating expenses, plus depreciation, depletion and amortisation costs in the first quarter were Dh2 billion, down from nearly Dh3.5bn in last year’s first quarter.
“We plan to maintain discipline in cost and operational efficiency while focusing investment to our most profitable assets to maximise cash flow,” said Mr Al Dhaheri.
The company’s relatively stable electricity and water business – which includes a near-monopoly of supply in Abu Dhabi – led revenue to increase to Dh2.2bn from Dh2.1bn a year earlier, while oil and gas revenue was up at nearly Dh1.3bn from Dh1bn.
Total revenues were up by 6 per cent on the year at just over Dh4.1bn.
However, the company said that total oil and gas production volume was down 14 per cent year-on-year at 132,200 barrels of oil equivalent per day (boed), “impacted by the 70 per cent reduction in oil and gas capital expenditure compared to 2014 levels, prior to the transformation programme”.
The company plans to increase capital expenditure (capex) this year to sustain production.
Taqa said its free cash flow – which is cash flow from operations minus capex – was up by 35 per cent at Dh2bn.
Capex, which was cut last year to Dh1.1bn from Dh6.4bn two years before and as high as Dh13bn in 2012, will now have to be increased to offset further production (and earnings) declines, according to analysis from Moody’s and Standard & Poor’s.
Mohammed Al Ahbabi, the chief financial officer, yesterday told investors that capex was up by 69 per cent at Dh458m in the first quarter and is forecast to be Dh1.8bn for the whole of this year.
Taqa has been in deep retrenchment mode since even before the oil price crash that began at the end of 2014, because of exposure to North American gas assets. Taqa reported a loss of Dh19bn for 2016 thanks to Dh22bn of asset value decline realised in the final quarter of last year.
This covered the North American assets, as well as oil and gas properties in the North Sea, the Netherlands and the Kurdish region of Iraq. The writedown followed the removal of an arrangement with “a related party”, which the company has not identified, to buy those assets at well above market value.
To shore up Taqa’s balance sheet, the company took transfer of land valued at nearly Dh19bn from its majority shareholder, the Abu Dhabi Water and Electricity Authority.
Adwea owns 74 per cent of Taqa, according to data from Bloomberg.
amcauley@thenational.ae
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