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Low oil prices have been not only weighing heavily on the financials of western oil majors, but also led to Abu Dhabi National Energy Company -- also known as Taqa -- writing down billions of dollars worth of oil and gas assets that resulted in a huge loss for 2016, the biggest loss the company has ever recorded.
State-controlled Taqa said on Thursday that it booked a net loss of $5.2 billion (19 billion dirhams), mostly due to impairment of $4.6 billion (16.9 billion dirhams), primarily related to oil and gas assets in response to lower commodity prices. According to Bloomberg, this was the largest ever loss for the company.
To compare, for 2015, Taqa booked a loss of $490 million (1.8 billion dirhams).
The 2016 impairment was recognized as “a one-time non-cash charge with no impact on ability to meet obligations including ongoing debt service obligations,” the company said.
Taqa’s last year revenues dropped by 17 percent, chiefly due to the impact of lower commodity prices and decreased sales volumes.
Free cash flow rose by 25 percent on the back of capex cuts and stricter cost management.
In order to cope with the low oil prices, Taqa completed its 2014-2016 ‘transformation program’, which resulted in total savings of $3.6 billion (13.2 billion dirhams), reduced capex by $2.3 billion (8.6 billion dirhams), and cut 25 percent of its global workforce, or more than 1,000 positions.
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“We have aggressively reduced our capital expenditure and cash costs, in our efforts to achieve cash flow neutrality despite low commodity prices,” Mohammed Al Ahbabi, acting CEO, said.
It’s not only Abu Dhabi National Energy Company that has been grappling with the low oil prices in Abu Dhabi. Last year, Abu Dhabi National Oil Company (ADNOC) merged two of its offshore oil companies, Abu Dhabi Marine Operating Corp and Zakum Development Co, in efforts to consolidate assets, boost efficiency, and reduce costs. ADNOC also plans to merge three shipping companies, Abu Dhabi National Tanker Co, Petroleum Services and Abu Dhabi Petroleum Ports Operating Co, by the end of this year.
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.