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TAQA, the global energy company based in Abu Dhabi, today reported its Q1 2013 operational and financial results.
Summary
Revenues were down 6%, largely due to a shut-in of Cormorant Alpha in January 2013 during a major inspection, repair and maintenance programme. Stronger North American gas prices were offset by weaker North American oil and liquids prices.
Profitability was consequently impacted, although in the comparable period in 2012 profitability was supported by the proceeds of disposals, making direct comparison difficult.
Power & Water faced operational challenges, due to a number of forced outages at TAQA’s domestic and international plants. TAQA’s organic growth projects are proceeding well, with Jorf Lasfar over 80% complete and Takoradi having broken ground. TAQA also progressing detailed negotiations to enter the Turkish energy market, following an agreement between the Turkish and UAE Governments.
Notwithstanding the shut-in of Cormorant Alpha, which is still on-going, TAQA made good progress in other areas of the North Sea, including making a discovery at the Darwin field and, post-period, securing government approval for its plans at the Cladhan field. A strong performance in the Netherlands also positively boosted TAQA’s performance. TAQA commenced operations at its Atrush block in the Kurdistan region of Iraq and is currently drilling its third well.
TAQA reinforced its strong financial position with robust available liquidity of AED 21.8 billion and, post period, Standard & Poor’s announced that it was raising TAQA’s A rating to a positive outlook.
Comment
Carl Sheldon, Chief Executive Officer of TAQA, said:
“I can take some positives from what was a challenging quarter. Our major construction and development projects in Morocco, Ghana, the Netherlands and Iraq are all progressing very well and will start generating significant revenues in the next two to three years. Stronger natural gas prices in North America position us well to take advantage of our large land position and prospects in Western Canada. Similarly, new developments and discoveries in our North Sea business promise to extend the life of these assets. The halting of production on the Cormorant Alpha platform was the right thing to do to ensure the safety and integrity of this critical piece of North Sea infrastructure.
Stephen Kersley, Chief Financial Officer, said:
“We started the year in a very strong financial position having renewed our corporate credit facilities and secured all bond maturities for the year at unprecedented rates. The outlook remains strong with increased liquidity and an enhanced debt maturity profile. Although our financial performance has been affected by operational outages, our cash flows remain extremely strong and we are well placed to benefit as those operational issues are resolved. I am also delighted that the strength of our cash flows have been recognised by Standard & Poor’s, which recently raised our A rating to a positive outlook. ”
Financial summary: Q1 2013 versus Q1 2012
Revenues and costs
Total revenues for Q1 2013 were AED 5.4 billion, 6% lower year-on-year, compared with total revenues of AED 5.7 billion in Q1 2012. Cost of sales, excluding construction expenses, were AED 3.5 billion in Q1 2013, an increase of 1% over the prior year period.
Power & Water
Power & Water revenues, excluding supplemental fuel and construction revenues, were flat at AED 1.9 billion. Construction and Finance revenues from the Jorf Lasfar and Takoradi 2 expansion projects of AED 517 million were offset by construction costs of AED 381 million, leaving a profit margin of AED 136 million.
Supplemental fuel income decreased 31% year-on-year to AED 658 million.
Operating expenses for Power & Water (which excludes fuel costs and construction costs) rose 15% year on year to AED 468 million in Q1 2013, due to an unplanned outage at Jorf Lasfar and higher costs at Taweelah in the UAE. Depreciation, Depletion and Amortisation (“DD&A”) expenses for Power & Water rose 2% to AED 455 million in Q1 2013, compared with AED 447 million in Q1 2012.
Oil & Gas
Total Oil & Gas revenues (including gas storage and other income) were down 17% at AED 2.4 billion for Q1 2013, due to lower production in the UK North Sea, offset by higher production in the Netherlands and stronger gas prices in North America.
Oil & Gas expenses rose from AED 812 million in Q1 2012 to AED 1.0 billion in Q1 2013, principally due to higher repair and maintenance costs in the UK. Oil & Gas Depreciation, Depletion and Amortisation (DD&A) expense increased by 2% to AED 907 million in Q1 2013, reflecting a higher DD&A rate in North America, due to future development costs, an amendment of reserves in the North Sea, offset by the impact of lower production in the North Sea.
Finance costs
Finance costs decreased by 1% to AED 1.3 billion in Q1 2012 to AED 1.2 billion in Q1 2013. The decrease was due to refinancing of debt at more favourable rates, partially offset by a small increase due to financing at Jorf Lasfar and Takoradi.
Profitability
Profit Before Tax was AED 445 million in Q1 2013, 68% lower year-on-year than AED 1.4 billion in 2012, due to lower revenues from Oil & Gas, principally due to lower production in the UK North Sea.
Income tax expense was AED 220 million for Q1 2013, compared to AED 724 million in Q1 2012. This consists of AED 321 million of income tax expense and AED 101 million of deferred income tax income. The effective tax rate decreased slightly to 49% from 52% in the prior year, reflecting lower production in the UK North Sea.
Profit for the period (after minority interests) was AED 106 million, a decrease of 80% compared to AED 534 million in 2012. The decline was principally driven by lower operating profit during the quarter and also reflects the disposals that were made in Q1 2012 which inflated the comparable period in the prior year.
Basic and diluted earnings per share attributable to equity holders of TAQA were AED 0.017, compared to AED 0.088 in the prior year period.
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