Like many other energy companies, Abu Dhabi National Energy Company-known as TAQA-suffered from the effects of low oil prices for three years. And now, like the international oil majors, TAQA is benefiting from the oil price rally, which allowed it to boost its profits.
But unlike almost all oil majors who continue to stick to strict capital discipline (with Exxon one notable exception), the Abu Dhabi company is now investing more across its businesses to grow its existing assets and increase profits.
TAQA reported this week a 42-percent yearly jump in its Q1 net income, to US$30 million (110 million UAE dirhams), and a 5-percent increase in revenues.
"TAQA is concentrating on optimizing its assets in the oil and gas business, while studying growth opportunities in the power and water sector," chairman Saeed Mubarak Al Hajeri said in a statement of the company. TAQA has oil and gas assets in North America, Europe, and Iraq.
Higher oil prices helped TAQA to return to an annual profit for 2017, after it had booked its biggest loss ever for 2016, following billions of dollars of write downs on oil and gas assets in response to the lower oil prices.
TAQA returned to profit last year and boosted revenues by 4 percent on the back of higher commodity prices. The company's realized oil price was 27 percent higher last year compared to 2016, and the realized gas price was up 25 percent.
Following several years of deep cuts, TAQA boosted its 2017 capital expenditure (capex) by 24 percent, "in line with the commodity price recovery, to protect and sustain the value of global assets," it said in the 2017 results presentation in March. The company increased investment in core assets to maximize cash flows.
TAQA's targeted capex for 2018 is US$572 million (2.1 billion dirhams).
Commenting on the Q1 results and plans for this year's investment, chairman Al Hajeri told Bloomberg in an interview on Thursday:
"We have moved now from an environment of cost-saving to an environment of investment across the business."
"We are investing heavily on producing more profit from our business," TAQA's chairman said.
"Our investment will be focused on growing the existing assets. We don't have plans to make any acquisitions."
The current strategy is to hold onto the assets and continue to grow them, Al Hajeri told Bloomberg.
"We run the business as if we're holding them long term," he said. Related: Iran Accuses U.S. Of Pushing Up Oil Prices
TAQA's assets abroad include oil and gas fields in Canada, oil producing assets in the UK's part of the North Sea, gas storage in the Netherlands, power generation capacity in the United States, and the Atrush oil field in Iraq's Kurdistan region, where production started last year and is planned to reach 30,000 boepd.
"We have approved more investment in Atrush," Al Hajeri told Bloomberg, adding that production is approaching the 30,000 bpd target.
"It's a great business for us and we are investing in it," TAQA's chairman noted.
The rise in the price of oil has also boosted the company's share price performance.
Shares in TAQA on the Abu Dhabi Securities Exchange (ADX) have jumped by 141.8 percent year-to-date and have soared 111.11 percent over the past 52 weeks.
Higher oil prices are helping the company to boost profits and share performance, and now it is looking to maximize the oil price rally with investments in its oil and gas assets.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More