TAQA Second Quarter and First Half 2010 Financial Results

TAQA Second Quarter and First Half 2010 Financial Results
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Published August 9th, 2010 - 09:26 GMT

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Sohar
,
TAQA
,
Suncor Energy
,
Oman’s Sohar Aluminium Company
,
TAQA NORTH
,
Abu Dhabi Securities Exchange
,
Sohar Aluminium Company
,
Suncor Energy Oil and Gas Partnership
,
West Central Alberta
,
E. Abdulla Saif Al-Nuaimi
,
Chief Executive Office

Abu Dhabi National Energy Company PJSC (“TAQA”), a publicly listed company on the Abu Dhabi Securities Exchange (ADX: TAQA), today reported its financial and operational results for the second quarter and first half of 2010.

 

 

Q2 2010

Q2 2009

% change

H1 2010

H1 2009

 

% change

Revenues (AED million)

5,141

4,380

▲17%

9,917

8,580

16%

Power & Water

(excl. supplemental fuel income)

1,598

1,557

▲3%

3,073

2,948

4%

Upstream & Midstream

2,036

1,759

▲16%

4,586

3,604

27%

Cost of sales (AED million)

3,687

3,169

▲16%

6,860

6,306

9%

EBITDA (AED million)

2,343

2,006

▲17%

4,860

3,896

25%

Net profit (AED million)

171

136

▲26%

458

176

160%

Basic earnings per share (fils)

2.8

2.2

▲27%

7.5

2.9

159%

Net debt to capital (%)

80.4%

83.4%

▼3.0%

80.4%

83.4%

▼3.0%

 

Summary

TAQA’s total revenues increased by 17% during Q2 2010, due to higher supplemental fuel income, improved performance in the domestic Power & Water business and stable contributions from the international Power & Water business.  The Upstream and Midstream businesses also benefited from the increase in commodity prices, which offset slightly lower production.

 

Comment

H.E. Abdulla Saif Al-Nuaimi, CEO & MD of TAQA, said:

“The quarter under review demonstrates the progress we are making in delivering against our strategic objectives. The balance of our portfolio of assets worldwide has once again produced robust financial performance. Total revenues have continued the upward trend which commenced at the end of 2009, benefiting from a more positive commodity pricing environment. This context, combined with incremental earnings from the Sohar acquisition, resulted in a significant improvement to net profit over the period; a positive progression that creates further value for our stakeholders.

 

While asset optimization and organic growth form the cornerstones of our strategy, we remain opportunistic and open to bolt-on acquisitions which consolidate our geographic footprint, fit naturally with our core competencies and offer the potential to increase our financial returns.  Two acquisitions made during the second quarter 2010 - a portion of Suncor Energy’s assets in Alberta, Canada, and the transfer of ADWEA’s holding in Sohar Aluminium Company - are an excellent fit”

 

Carl Sheldon, General Manager of TAQA, said:

“We have worked hard over the quarter to continue to refine our operating capability; resulting in improvements to technical availability in our Power & Water business and the ability to once again benefit from the uplift in energy pricing within our considerable Upstream footprint.  This Upstream contribution has been achieved despite lower production levels resulting from our maintenance program on assets in the UK North Sea and reduced 2009 drilling activity in Canada in response to low North American gas prices.

 

The expansion of power generation capacity from our domestic Power & Water portfolio, notably as we capture the full effect of the expansion of the Taweelah A1 facility for the first time, has resulted in an 11% increase in power generation when compared to the same period in 2009.  Our Power & Water portfolio, comprising both international and domestic assets, exhibited average technical availability of 97% during the quarter.  This operational excellence continues to form the backbone of stability in the company’s cash flow generation.”

 

Financial Summary

Revenues from the sale of electricity and water during the second quarter increased 3% year-on-year to AED 1.6 billion. The marginal increase was due to the expansion of Taweelah A1 which was commissioned at the end of Q2 2009.

Upstream and Midstream revenues in Q2 2010 were AED 2.0 billion, an increase of AED 0.2 billion compared to AED 1.8 billion in Q2 2009. This 16% increase was driven primarily by the increase in crude oil and natural gas liquid prices plus revenue from DSM assets acquired in October 2009.

The year-on-year increase in net profit can be attributed to greater capacity in our Power & Water business combined with more favourable commodity pricing in our oil and gas businesses.  Additionally, the transfer of the Sohar aluminium plant with an effective date of 1 January 2010 added AED 90 million to our net profit.

 

Over the past three months TAQA maintained its net debt to capital position at 80%.

 

Operational Highlights

 

Power & Water

Key Performance Indicators

 

Q2 2010

Q2 2009

% change

Total revenues in AED million

(excluding supplemental fuel income)

 

1,598

1,557

3%

% of overall revenues

 

44%

47%

3%

Total generation capacity (MW)

Global

14,903

13,903

7%

Domestic

8,775

8,775

-

International

6,128

5,128

20%

Total power production (Gwh)

Global

15,125

13,558

12%

Domestic

11,435

9,994

14%

International

3,690

3,652

1%

Technical availability of power generation business (%)

Global

97.1%

97.4%

0.3%

Domestic

98.8%

98.7%

0.1%

International

89.9%

92.0%

2.1%

Water desalination capacity (MIGD)

 

654

654

-

Total water desalination (MIG)

 

54,581

52,904

3%

 

Total revenues from Power & Water increased 3% year-on-year to AED 1.6 billion, reflecting the greater power generation capacity of TAQA’s domestic portfolio. The expansion of power generation capacity from our domestic portfolio, notably capturing the full effect of the expansion of the Taweelah A1 facility for the first time, provides a 12% increase in power generation when compared to the same period in 2009.  

 

During Q2 2010 the domestic power plants operated at an average of 98.8% technical availability, while TAQA’s international plants recorded 89.9% availability giving an overall average of 97.1% across the group.

In June ADWEA transferred its 40% equity stake in Oman’s Sohar Aluminium Company to TAQA. The aluminium smelter and accompanying 1,000 MW power plant gives TAQA access to a new market and complements its existing MENA footprint.

 

Upstream and Midstream

 

Key Performance Indicators

 

Q2 2010

Q2 2009

% change

Total revenues in AED million

 

2,036

1,759

16%

% of overall revenues

(excl. supplemental fuel income)

 

56%

53%

3%

Total production

(mboe/day)

Global

127.5

138.2

8%

TAQA North

87.7

92.8

5%

TAQA Bratani

31.6

40.2

21%

TAQA Energy

8.2

5.2

58%

Average net realized price of crude oil sold

(US$ per barrel)

TAQA North

$66.04

$53.12

24%

TAQA Bratani

$78.74

$55.15

43%

TAQA Energy

$79.86

$38.53

107%

Average net realized price of gas sold

(US$ per thousand feet)

TAQA North

$4.09

$3.45

19%

TAQA Bratani

$5.67

$6.02

6%

TAQA Energy

$7.05

$8.19

14%

                                                                                                                                                            

Upstream and Midstream revenues increased 16% compared to Q2 2009, largely reflecting the changes in the oil price at TAQA NORTH and in Europe. Both prices were strong throughout the second quarter 2010, averaging US$ 78.05/bbl for WTI and US$ 79.41/bbl for Brent. North American natural gas prices also showed an improvement over the second quarter of 2009, with NYMEX natural gas averaging US$ 4.35/mmbtu for the quarter.

 

TAQA NORTH acquired a portion of Suncor Energy Oil and Gas Partnership’s interests in West Central Alberta for a total consideration of CDN $285 million. The acquisition will enhance TAQA NORTH’s production by approximately 6,100 boe/day of liquid rich natural gas.  This transaction is expected to close in the third quarter of 2010.

 

Production volumes at TAQA Bratani were 31,600 boe/day in the second quarter, down 21% from the first quarter of 2010 due primarily to a 28-day planned shutdown at the Tern Alpha platform. Additionally, TAQA experienced water injection issues at the Cormorant Alpha and North Cormorant platforms which have since been resolved.

The North Cormorant drilling campaign has been completed and drilling on the Pelican field continued throughout the quarter with two wells now complete. The tie-in of the first well is expected in the third quarter.

 

At TAQA Energy, the Bergermeer Gas Storage project was granted approval in July to increase the reservoir pressure from 35 bars to 80 bars, thus increasing the allowable volume of cushion gas in the facility. The project is waiting for final permitting before commencing the construction phase.

The Rijn Oil project, in which TAQA holds a 38.3% interest, is on track for first oil in September. This project is expected to add approximately 2,500 bbl/day of gross production (950 bbl/day net).

 

Key corporate developments during Q2 2010

On 28 of April 2010, TAQA announced the appointment of H.E. Abdulla Saif Al-Nuaimi as Chief Executive Office, further strengthening the management team.

 

In April, TAQA swapped $1.0 billion of its 2013 fixed rate bonds into floating rate. This was done to optimize the company’s exposure to floating interest rates.

 

On 23 May 2010, TAQA announced that TAQA NORTH successfully completed the refinancing of a CDN$1.325 billion revolving credit facility. The new facility is a CDN$1.0 billion three year revolving credit facility funded by a syndicate of eight banks.

 

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