Abu Dhabi’s Taqa reports Dh416 million loss as weak oil price hits revenues

The company said it has reduced capital expenditure by 43 per cent during the first nine months of the year.

Taqa’s Tern oil platform in the North Sea, UK. Courtesy Taqa

Abu Dhabi National Energy Company (Taqa) yesterday posted a third-quarter loss, although its top managers highlighted some operational improvements.

Taqa reported a loss of Dh416 million for the three months that ended on September 30, versus a profit of Dh107m in the same quarter last year. The loss was expected, given the sharp decline in oil prices. The company’s latest result brings its loss for the first nine months of this year to Dh581m, from a profit of Dh620m a year earlier.

The losses were driven by a halving of revenues at Taqa's oil and gas division to Dh1.5 billion in the third quarter, from Dh3.2bn in the same period last year.

Meanwhile, revenues from electricity and water operations surpassed those of oil and gas and held steady in the third quarter at Dh2.3bn.

“In challenging times our overall results continue to reflect our environment,” said Edward Lafehr, Taqa’s chief operating officer. But he said the improved operational performance, especially in water and electricity, as well as Taqa’s firm cash and liquidity position, “underpins our efforts as management tries to reset the financial and operating framework of the business”.

Even before the oil price collapse, Taqa was hit by its exposure to natural gas assets in North America, where prices were first to tumble. This was exacerbated by the oil price crash and the company’s heavy debt load, which stood at about Dh72bn at the end of the latest quarter, and interest payments which have been running at well above Taqa’s gross profit for several quarters.

Taqa has cut its capital expenditure by Dh1.9bn, or 43 per cent year-on-year. Grant Gillon, Taqa’s finance chief, said operating expenses had been cut by Dh1.1bn already, putting the cuts well ahead of the target of Dh1.5bn by the end of next year.

The cuts have come at a cost – Taqa said its oil and gas production fell about 9 per cent to 144,900 barrels of oil equivalent per day (boepd), from 158,500 boepd, in the first nine months of the year.

In addition, Taqa cut 39 per cent of jobs at its Abu Dhabi headquarters and reduced its global oil and gas headcount by 25 per cent.

Taqa shares, which are thinly traded, have declined about 25 per cent in the past month. The shares remained unchanged at Dh0.42 yesterday.

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