UAE’s TAQA Slashes Capex Plans, Dividend, After Big Q4 Loss

Abu Dhabi National Energy Co (TAQA), the state-owned oil explorer and power supplier, said on Wednesday it would slash its capital expenditure plans and costs after posting big losses in the fourth quarter on lower oil prices.

The company, 75 per cent owned by the government of Abu Dhabi, would reduce its capex budget for this year by 39 per cent on 2014 levels — the equivalent of Dhs2.5 billion ($680.7 million) — and would implement a cost-cutting plan that would save Dhs1.5 billion over the next two years, it said in its results statement.

Energy companies around the world have scaled back the amount of cash for expansion in response to an oil price which is down by around half since its peak in June last year, which has also pushed them to trim costs and focus on short-term returns.

TAQA’s move comes after it reported a net loss of Dhs3.63 billion for the final three months of 2014, according to Reuters calculations, wider than the Dhs2.6 billion loss it reported in the corresponding period of the previous year.

Reuters calculated the fourth-quarter figure from financial statements from the company after it did not disclose a quarterly figure in its earnings statement.

This quarterly loss dragged down its full-year earnings, with TAQA saying in its statement it made a net loss of Dhs3.01 billion in 2014 compared with a loss of Dhs2.52 billion in 2013.

It would not pay a dividend for 2014 as a result, it added.

TAQA’s shares slumped a maximum daily limit of 10 per cent in early trading.

TAQA said it had booked a non-cash impairment of Dhs3.3 billion which “reflected the rapid reduction in oil and gas prices in the second half of 2014”.

This overshadowed a 6.1 per cent increase in total revenue in 2014, which climbed to Dhs27.3 billion, the statement said.

The firm has achieved full capacity at its Bergermeer gas storage facility in the Netherlands as of April 1, it said in a separate statement.