TAQA slashes 2016 capex target despite narrower Q4 loss

Abu Dhabi National Energy Co (TAQA) has slashed its proposed capital expenditure for 2016 despite reporting yesterday a narrower fourth-quarter loss, as the company is impacted by lower oil prices. Global oil firms have been scaling back investments and cutting costs to cope with a slump in the price of crude. TAQA, 75% owned by the government of Abu Dhabi, said it had reduced capex by 52% in 2015 and would cut spending by a further 42% in 2016 to no more than 1.8bn dirhams ($490mn). The company has also been shedding jobs and has reduced its workforce by around a quarter since 2014, following the elimination of 32% of its oil and gas jobs and 55% of its headquarters staff. “We exceeded all of our internal targets while shifting to a leaner and more efficient organisation worldwide, with significant revisions to our operating model,” Edward Lafehr, chief operating officer, said in the statement. The state-controlled oil explorer and power supplier made a loss of 1.22bn dirhams in the three months to December 31, versus a net loss of 3.63bn in the same period of 2014. It posted a net loss of 1.8bn dirhams for 2015 as a whole compared with a loss of 3.01bn in 2014. The annual loss came on the back of lower revenue from oil and gas, which nearly halved in 2015 to 6.29bn dirhams from 12.0bn as commodity prices slumped. TAQA also booked a post-tax impairment charge of 681mn dirhams in 2015. TAQA will not pay dividends for 2015, according to a bourse filing, the third successive year in which the company has not paid anything to shareholders according to Thomson Reuters data. In line with the company’s strategy of selling non-core assets, TAQA plans to divest its stakes in Abu Dhabi-based Massar Solutions and the Lakefield wind power project in the US, the statement added. TAQA has already said Lakefield would be sold to Qatar’s Nebras Power, while sources told Reuters in September that shareholders of Massar Solutions had picked HSBC to advise on the sale of 40% of the car rental firm.