TAQA profits fall sharply

Profits at the Abu Dhabi National Energy Company, also known as TAQA, fell 45 per cent in the fourth quarter as declining oil and gas prices took their toll. But preliminary net profits for the year were 89 per cent higher than 2007, at Dh1.95 billion (US$531 million), pointing to the strengths of the company's acquisitions strategy, said Peter Barker-Homek, the company's chief executive. "The fall in oil and energy prices during the course of 2008 demonstrated the importance of our diversified global operations," he said. "Despite the prevailing environment, we have been able to deliver significant growth in top and bottom line." TAQA, which is majority-owned by the Abu Dhabi Water and Electricity Authority, invests in a range of energy assets abroad, from oil and gas fields in the North Sea and Canada to power stations in the US. The company did not specify results for the fourth quarter, but net profits were calculated at Dh360m by The National and confirmed by a company official. Fourth-quarter net profits were about Dh653m in 2007, indicating a year-on-year decline of about 45 per cent. In a statement, TAQA cautioned against making year-on-year comparisons, noting that profits in 2007 were boosted by several large acquisitions. The results announced yesterday were in line with expectations, said Bobby Sarkar, a financial analyst at Al Mal Capital. "The reason [quarterly] results are down year-on-year is because of lower energy prices," he said. Under Al Mal's prediction of oil prices holding at between $40 and $50 per barrel this year, "you're probably going to see weak financial results", he said. TAQA made $6bn worth of acquisitions last year, Mr Barker-Homek said, including C$5bn (Dh14.77bn) for PrimeWest, a Canadian oil and gas company, and $631m for six offshore fields in the North Sea. "We believe that the North Sea offers significant potential for next-generation operators like TAQA and aim to extend the productive life and commercial viability of these assets," he said. In December, TAQA formed a new joint-venture firm with RBS Sempra Commodities to invest in the US energy market. The company acquired an 833-megawatt power plant in New Jersey for an undisclosed sum. Mr Sarkar expected TAQA's acquisitions growth to slow down this year. "They're being more prudent on acquiring companies," he said. "In this kind of market, it's prudent to wait and see." [e-mail]