Abu Dhabi's TAQA Slashes Capitex As Oil-Decline Limits Revenue
Abu Dhabi National Energy Co., which is also known as TAQA is a state-controlled utility that pumps crude and natural gas to the U.K. coming from Canada. It will curb capital expenditure and considers selling its assets after decline in oil prices cut oil and gas revenue by nearly half.
The energy company is selling its 50% share in the Lakefield wind farm situated in the U.S. state of Minnesota and amortizing its holding in Massar Solutions PJSC, an Abu Dhabi-based transport company. Taqa has cut more than 900 jobs which are about 25% of its global workforce. The 32% of its oil and gas positions and 55% of its headquarters are eliminated as well, according to Bloomberg.
With debts that total to $28.7 billion, TAQA is reviewing proposals from banks to refinance $1 billion that is about to mature in October. The company has hired Blackstone Group LP, an investment and advisory firm to study options for controlling its debt.
The company reported of 1.22 billion dirhams loss in the three months to December 31 against a 3.63 billion net loss in the same period of 2014. A charge of 681 million dirhams in post-tax impairment in 2015 was also booked. According to an Exchange filing, no dividends will be paid by TAQA for the year 2015 which is the third consecutive year the company has not paid anything to shareholders, as reported by Reuters Africa.
"We exceeded all of our internal targets while shifting to a leaner and more efficient organization worldwide, with significant revisions to our operating model," Edward Lafehr, chief operating officer, said in the statement.
It was reported last year that the Abu Dhabi government was planning to merge TAQA with another state entity but were later disclaimed by the company. The company is one of the many firms that cut costs due to the continuous oil price decline from a $115 per barrel peak in mid-2014 to about $40 this month, Gulf Business reports.
Due to the prolonged slump in oil prices, many oil and gas firms sell some of their assets instead of waiting to get bankrupt. Job cutting is one way to cut spending in addition to the cutting of capital expenditure.