The Abu Dhabi National Energy Company, also known as Taqa, has revised its profit for last year upwards to more than Dh1 billion as it revealed it had more Canadian oil and gas than previously estimated.
The oil, gas and power group controlled by the Government of Abu Dhabi said yesterday its net earnings last year were Dh1.02bn (US$277.6 million), a sharp improvement from Dh182m in 2009. In unaudited financial results released this year, it had posted Dh937m of earnings.
Carl Sheldon, the general manager of Taqa, attributed the revision to the completion of a review of the company's oil and gas reserves at the end of last year. The assessment led to an upgraded estimate of the company's western Canadian reserves - the result of a successful development programme in the region.
"We had better success with the drill bit than expected," Mr Sheldon said.
That would have eliminated some or all of the asset depreciation the company would have had to declare if it had not replaced its oil and gas production last year with new reserves. Depreciation is one of the items subtracted from revenue to calculate net earnings.
Rising oil prices last winter would also have boosted the company's year-end reserves figures. An oil and gas producer's estimated reserves reflect the amount of those commodities it could extract economically at given prices. For accounting purposes, those are closely linked to the market closing prices of the relevant commodities on the last day of the financial period under consideration.
Mr Sheldon said Taqa's improved financial performance last year was due to higher oil prices and the strength of the company's power business.
Taqa had completed all necessary refinancing requirements for this year and had no further refinancings looming until October next year, he said.
The company declared a dividend yesterday of 10 fils per share, the same as last year. The payout to shareholders represents about 59 per cent of its total earnings per share last year.
Last month, Taqa was among 11 companies and groups that the Kuwaiti government's Partnerships Technical Bureau pre-qualified to bid for a contract to build a 1,000 megawatt gas-fired power plant in the centre of Kuwait City.
"It's part of our strategy to grow in the Mena region," Mr Sheldon said yesterday. "There's a lot of demand for additional generating capacity right across the region."
The Kuwaiti electricity project is an unusual investment target for Taqa, which under previous management amassed a portfolio of power assets across four continents by acquiring stakes in existing developments. Mr Sheldon said the company's current "organic growth" strategy included participating in projects built from scratch, where appropriate partners were available.
In January, Taqa sold its 50 per cent stake in a portfolio of Caribbean power assets back to its joint-venture partner, the Japanese conglomerate Marubeni for $320m as it sought to pay down debt.