Taqa full year 2008 financial results

Key highlights of the results for the full year 2008:

- Net profit (after minority interests) grew 76% to Dhs1.8bn compared with Dhs1.0bn in 2007.
- Basic earnings-per-share increased to 36 fils on the increased shares outstanding from the convertible bonds issued during the year versus 25 fils in 2007.
- Total assets grew 25% to Dhs86bn at 31 December 2008 compared with Dhs69bn at year end 2007.
- Ebitda of Dhs10.2bn and a margin of 60%, versus Ebitda of Dhs5.2bn and a margin of 63% in 2007.
- Revenue of Dhs16.8bn, an increase of 102% from Dhs8.3bn for 2007.
- Revenue from the oil and gas business grew by 565% to Dhs7.5bn, from Dhs1.1bn as a result of the full consolidation of acquisitions completed in 2008.
- Revenue from the electricity and water business, excluding supplemental fuel, grew by 17% to Dhs5.5bn, from Dhs4.7bn for the same period in 2007.
- Revenue derived from gas storage grew by 67% to Dhs506m, compared with Dhs303m for the same period in 2007.

Upstream and Midstream

- Upstream and Midstream activity generated revenues of Dhs8bn (comprising oil and gas and gas storage), 47% of total revenues and contributing 46% of net profit.
- Average daily production was 114,1 mboe in 2008, split between Taqa Energy (6.7 mboe), Taqa Bratani (13.7 mboe) and Taqa North (93.7 mboe). (put in order by size and combine Taqa Europe)
- Average net realized price of crude oil sold was $83.39 per barrel for Taqa North, $112.88 per barrel for Taqa Energy and $70.49 per barrel for Taqa Bratani.
- Average net realized price for natural gas sold was $8.16 per thousand cubic feet for Taqa North, $10.45 per thousand cubic feet for Taqa Energy and $6.24 per thousand cubic feet for Taqa Bratani.
- Drilling success rate of 99.7% for Taqa North.
- Results represent significant growth, following the successful integration of Taqa's acquisitions in 2008.

Downstream

- Downstream activities generated revenues of Dhs5.5bn in 2008, excluding supplemental fuel, comprising 33% of total revenues in 2008, and 54% of net profit.
- Taqa's downstream capability now represents total global generation capacity (gross) of 10,514 MW.
- In 2008, Taqa produced a total of 47,704 GWh in 2008, compared with 48,229 GWh in 2007, a fall of 1%.
- Taqa's total water desalination in 2008 was 191,150 MIG, with a capacity of 594 MIG.
- Power and water in the UAE accounted for a total of 79% of the total revenue.
- Technical availability of power generation businesses averaged 93% with an average capacity of 71%.

Finance

- Cash and cash equivalents as at 31 December 2008 was Dhs4.1bn, compared with Dhs7.4bn for 2007.
- Finance costs increased from Dhs2.5bn to Dhs3.8bn, to fund acquisitions.
- Taqa's undertook a bond buy back programme in 2008 totalling Dhs1.0 Billion)
- At 31 December 2008, the Group had available Dhs8.4bn (2007: Dhs3.8bn) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

Key highlights of the results for Q4 2008:

- Net profit, after minority interests, fell 64% to Dhs233m compared with Dhs653m in the same quarter in 2007, largely due to the fall in oil and gas prices and an impairment charge of Dhs271m (net of tax) taken in 2008.
- Ebitda of Dhs1.9bn for Q408, giving an Ebitda margin of 50% versus Ebitda of Dhs1.8bn and a margin of 59% in the same period in 2007. Ebitda margin for 2008 excluding supplementary fuel was 42%.
- Total revenue reached Dhs3.7bn compared with Dhs3.0bn for the same period in 2007, an increase of 23%.
- Revenue from oil and gas activities (including gas storage) grew 60% to Dhs1.4bn, compared with Dhs0.9bn for the same period in 2007. This increase reflects the acquisition of upstream assets in North America and Europe in 2008. Lower average oil and gas prices experienced during the period have impacted on revenue.
- Average daily production was 118.9 mboe, split between Taqa Energy (6.0 mboe), Taqa Bratani (19.1 mboe) and Taqa North (93.8 mboe).
- Average net realized price of crude oil sold was $43.48 per barrel for Taqa North, $41.04 per barrel for Taqa Energy and $54.08 per barrel for Taqa Bratani.
- Average net realized price for natural gas sold was $5.93 per thousand cubic feet for Taqa North, $11.95 per thousand cubic feet for Taqa Energy and $7.02 per thousand cubic feet for Taqa Bratani.
- Revenue from the electricity and water business, excluding supplemental fuel, grew by 18% to Dhs1.5bn, from Dhs1.3bn for the same period in 2007.

In a Board meeting held on March 18, 2009, the Board of Directors of Taqa have recommended a cash dividend of Dhs0.15 per share on all outstanding shares. This recommendation will be submitted for shareholder approval at Taqa's Annual General Meeting to be held on April 21, 2009.

Peter Barker-Homek, Chief Executive Officer of Taqa, said:

"Following acquisitions by Taqa North in Canada and Taqa Bratani in the North Sea, 2008 was a year in which we began to execute upon our long-term strategic objective of building a diverse and equally distributed asset base in North America, Europe and the Middle East. The extension of our footprint brought with it significant new experience as an operator, upon which we continue to build."

"Our diversification strategy has ensured that while the group benefited from the high oil price due to our expanded upstream operations in the first half of 2008, the strength of our midstream and downstream businesses helped to offset the sharp drop in oil prices in the second half of the year. We continue to have real confidence in the long-term growth prospects of the company in spite of short term pricing environment fluctuations, but will be prudent in taking on new projects and ensure that we are carefully controlling costs across the business - ultimately protecting profitability. During the course of 2008, we have acted promptly and decisively in uncertain and volatile financial markets. As a result, Taqa is well capitalised with no short term funding requirements and significant available liquidity. This positions us well to continue to fulfil our long-term growth objectives throughout 2009 and to benefit from the opportunities that the market may present." he added.

Corporate activity during the period

January 2008 marked Taqa's completion of its $5bn acquisition of PrimeWest Energy Trust. Taqa North is now one of the top ten companies in Canada in terms of net proven natural gas reserves and in the top 12 companies in terms of oil and gas production.

In January 2008, Taqa agreed to a $3.1bn, one-year credit facility to partially finance the PrimeWest acquisition. The one year facility was refinanced in August 2008 and syndicated to multiple international lenders with a term of three years.

At its AGM in April 2008, Taqa declared a dividend of Dhs4.15m to its shareholders.

In June 2008, Taqa announced the issuance of Dhs4.15bn ($1.1bn) of convertible bonds which converted into common shares on 1 September 2008. The new shares commenced trading on the Abu Dhabi Securities Exchange on 16 October 2008.

On 7 July 2008, Taqa announced that Taqa Bratani had signed a Sale and Purchase Agreement with Shell U.K. Limited and Esso Exploration and Production (UK) Limited to purchase the equity pertaining to operating licenses for six offshore fields in the UK North Sea. The fields' average daily production in the region of 40,000 barrels of oil equivalent (boe) represents a significant increase to Taqa's existing European footprint. The $438m acquisition closed on the 1st December 2008.

In July, Taqa issued $1.5bn of notes under its Medium Term Note program. The offering consisted of $1.0bn of five year notes maturing in 2013 and $0.5bn of 10-year notes maturing in 2018.

In September 2008, as part of Taqa's portfolio optimisation, the group sold a 20% interest in Shuweihat CMS International Power Company and a 50% interest in Shuweihat O&M Limited Partnership to Sumitomo Corporation. Taqa retains a 54% stake in this plant.

In December 2008, Taqa, and the Bergermeer project consortium, signed a Memorandum of Understanding with Gazprom, in respect of cushion gas for the Bergermeer gas storage facility. The gas storage facility will enhance the security of energy supply to Dutch and European consumers and will contribute significantly to the liquidity of the North-West European gas markets.

December 2008 also saw Taqa and RBS Sempra Commodities announce the creation of Taqa Gen X, a joint venture focused on investments in the downstream energy business in North America. Simultaneously, Taqa Gen X announced its first investment in a tolling agreement for the Red Oak power plant, an 830 MW combined cycle gas turbine plant, located in Sayreville, New Jersey, USA. Taqa Gen X will play an active role in ensuring the long-term power demands for the region continue to be met.