Dubai: Abu Dhabi National Energy Company, which took an impairment of $858 million in North America last year, plans to sell assets to repay debt as it returned to profit in the second quarter.
The state-controlled utility, also known as Taqa, reported a second-quarter attributable profit of Dh239 million ($65 million), rebounding from a loss of Dh172 million a year earlier, it said in a statement to the Abu Dhabi stock market Wednesday.
The company, which produces power, crude oil and natural gas from Canada to North Africa, returned to profit in the second quarter, buoyed by a 47 per cent increase in oil and gas revenue.
The shares rose 2.8 per cent to Dh1.12. The stock has dropped 24 per cent this year, compared to a 17 per cent gain in the benchmark ADX General Index.
"We know the company is leveraged and it went on an investment spree, acquiring assets across geographies," Sebastien Henin, who oversees $90 million as head of asset management at the National Investor in Abu Dhabi, said yesterday by telephone. "Investors would want to look first at some real divestments before they take any positions in the stock."
Taqa, which suspended oil operations in Iraq this week because of escalating instability near the country's Kurdish region, said it expects to pay 2016 debt maturities from its own cash flow and unspecified asset sales. The company has available liquidity of $5 billion, including $1.1 billion in cash, and doesn't intend to return to the bond market until 2017, according to yesterday's statement.
Revenue from oil and gas jumped to Dh3.1 billion from 2.1 billion in the second quarter of 2013, Taqa said. Sales from the power and water division dropped to Dh2.4 billion from Dh2.5 billion in the same period a year ago.
$26.5b in loans
Taqa, which produces power, crude oil and natural gas from Canada to North Africa, has $26.5 billion of loans and bonds outstanding, according to data.
The utility started commercial operations at its Bergermeer gas storage facility in the Netherlands in April, while its UK operations produced a record average volume of 61,500 barrels of oil equivalent in the first half, Taqa said in the statement. Last year it took over oilfield operations in Iraq and oil and gas deposits in the UK from BP.
Expansion of the Takoradi 2 power station in Ghana is more than 90 per cent complete, and the plant will be operating in the fourth quarter, the company said. Taqa ended talks to invest in two hydroelectric plants in India and the Sulaymaniyah power station in Iraq's Kurdish region, steps that will improve cash flow and reduce debt leverage, it said.
"Greater efficiencies and cost control, combined with a conservative view on growth projects and acquisitions, will ensure we can deliver our commitment to reduce debt and improve financial performance."