TAQA announces annual audited results for 2013

ABU DHABI: TAQA, the Abu Dhabi based international energy and water company, today announced its annual audited results for 2013. TAQA’s underlying revenues, cash flow and earnings all saw improvement in a year of resilient operational performance. Underlying revenues grew 3% year-on-year to AED 21.1 billion, and the business continued to generate strong operational cash flows, with EBITDA rising 1% to AED 13.4 billion.

The net result was affected by a one-off, non-cash impairment related to the value of the company’s North American oil and gas assets. The company continues to enjoy a strong financial position, with high levels of liquidity, and has planned capital expenditure in excess of USD 2 billion in 2014.

The power and water segment, the bedrock of TAQA’s business, continued to produce a strong revenue and earnings stream, while oil and gas recovered from a setback in the UK early in the year to end the year on a high note with record production levels. The company hit key milestones on its large construction and growth projects, with several new facilities poised to come on stream over the next 18 months in the Netherlands, Morocco, Ghana and Iraq.

In the North Sea, TAQA successfully integrated the Harding platform and associated assets, which provides the company with a development portfolio across three fields that will extend the life and sustainability of the existing business in the UK. In Q4, UK production levels were a record 68,400 barrels of oil equivalent per day (boed), compared with 39,500 boed during the same period in 2012, an increase of 73%.

In North America, TAQA effected a turnaround. The business was restructured, reducing headcount by 162, disposing of non-core acreage and creating a simpler organisation. A more focused capital spending programme centred around the company’s highest-value prospects has already started to generate higher production, while maintaining an industry-leading safety performance.

In Iraq, TAQA secured regulatory approval for the development plan of the Atrush field, with the first oil production expected in 2015. In the power and water segment, underlying revenues grew by 5% to AED 9.0 billion, led by a strong performance of TAQA’s majority ownership of the U.A.E. power and water fleet. TAQA made great progress in its largest growth and construction projects.

The first of two new units at the Jorf Lasfar Energy Company power plant in Morocco, where TAQA already provides about 40% of the country’s power, synchronised to the grid in October, and the second unit is due for commissioning in the first half of 2014. The successful IPO of the Moroccan business on the Casablanca stock exchange in December raised significant funds for TAQA and added a critical new stakeholder base for the company.

In Ghana, the company passed the half way mark in its expansion of the Takoradi 2 power plant, which is set to increase electricity production by 50% with a highly efficient combined cycle unit.

Construction of the Bergermeer gas storage plant in the Netherlands reached an advanced stage, with the start of preliminary operations on schedule for April 2014. When this project is complete in 2015, it will be the largest open access gas storage facility in Europe, significantly contributing to Europe’s energy security.

TAQA’s financing operations continued to set a benchmark for the region, with the refinancing of the Shuweihat S2 power and water plant in the U.A.E. setting a precedent for future non-recourse financing of U.A.E. power stations.

The company made significant disposals over the period, including non-core acreage in North America and the non-operated Noordgastransport B.V. pipeline business in the Netherlands.

The company reported a net loss of AED 2.5 billion, affected by a one-off, non-cash impairment of AED 3.2 billion, mostly relating to the value of oil and gas holdings in North America. The impairment was realised as a result of a reduction in the long-term assumptions for natural gas prices in North America and is in line with recent write-downs by other natural gas producers in the region. The impairment does not affect the company’s ability to continue operations or service its debt obligations.

As a consequence of the net loss, the company will not pay a dividend for 2013.

Carl Sheldon, Chief Executive Officer, commented, “TAQA has grown into Abu Dhabi’s leading international operator of strategic national energy infrastructure. We achieved record levels of oil and gas production, while underlying revenues from our power and water business rose strongly. The company is well positioned to take advantage of the unique opportunities ahead.” Stephen Kersley, Chief Financial Officer, said, “Underlying revenues and cash flow rose year-on-year, while the net result was affected by a one-off, non-cash accounting entry. Our strong levels of liquidity enable us to continue to fund operations and service our debt obligations on favourable terms.”