Taqa to cut US, Canada spending by 30% after third quarter loss

REUTERS

ABU DHABI

ABU Dhabi National Energy Co (Taqa) will cut spending in North America by 30 percent in 2013 to weather a downturn in commodity prices, its chief executive said after reporting a third-quarter loss.

Taqa, which is 75-percent owned by the Abu Dhabi government, will cut 2013 capital expenditure in Canada and the United States to $500 million from the planned $750 million, Carl Sheldon said in a conference call on Wednesday.

While oil prices continued to soften, natural gas prices were 40 percent lower in third quarter compared with the same period last year, the company said.

Though its North American spend will be cut, overall capital expenditure will remain unchanged at about $2.2 billion to $2.3 billion, Sheldon added.

The company swung to a third-quarter net loss of 288 million dirhams ($78.4 million), against a profit of 537 million dirhams a year ago, largely because of 2.73 billion dirhams in construction costs related to the Jorf Lasfar power plant in Morocco and a 272 million dirham charge to account for tax increases in the UK.

“Our financial performance over the past quarter has been impacted by a series of one-off items - both cash and non-cash,” Chief Financial Officer Stephen Kersley said in a statement.

Revenue rose 43 percent to 8.83 billion dirhams during the quarter, from 6.2 billion dirhams a year ago. Oil and gas revenue fell to 2.56 billion dirhams from 2.74 billion dirhams, while fuel revenue dropped to 952 million dirhams from 1.15 billion dirhams.

Taqa said that it will either sell non-core acreage or increase production in core areas in North America to counter the downturn in oil and gas prices.

The company, which also runs power plants in Morocco, Saudi Arabia, Ghana and India, added that it plans to start oil and gas operations in northern Africa.

On Monday Taqa mandated five banks for a dollar- denominated bond that could be issued before the end of the year.

Taqa last tapped global debt markets in December last year with a $1.5 billion two-tranche bond to refinance debt.

Separately, sources told Reuters on Monday that Taqa is in advanced talks to buy a stake in an oil block in Iraqi Kurdistan by taking a majority interest in General Exploration Partners.

Taqa shares shares were trading flat on the Abu Dhabi bourse at 0900 GMT but are up about 9 percent this year.