Taqa's Net Jumps Fivefold, Propelled by Asset Sale

By Shaji Mathew and Ayesha Daya

Oct. 30 (Bloomberg) -- Abu Dhabi National Energy Co.'s third-quarter profit surged more than fivefold, propelled by a one-off sale of a power asset and on higher energy prices.

Net income jumped to 723.1 million dirhams ($197 million), or 0.13 fils a share, from 131.9 million dirhams, or 0.03 fils, a year earlier, the company said today in a statement.

``The results were in line on the revenue side, but it is weaker than expected on the earnings-per-share side as almost 6 fils of the EPS came from a one-time gain from sales of downstream assets,'' Bobby Sarkar, vice president for equity research at Al Mal Capital PSC., said today in an e-mail.

Taqa, which is in the midst of a buying spree to triple energy assets to $60 billion by the end of 2012, has oil and gas assets making up almost two-thirds of its business. The company is also seeking power purchases in Canada and the U.S. It spent $11 billion to buy oil and power assets across the world in 2007.

The energy company supplies 90 percent of the water and electricity needs of Abu Dhabi, the capital city of the United Arab Emirates. Last month, it sold 20 percent of the U.A.E.'s Shuweihat S1 power plant and 50 percent of the venture that operates the facility to Sumitomo Corp., Japan's third-largest trading group, gaining 324 million dirhams from the transaction.

Shares Gain

Taqa traded unchanged at 1.98 dirhams in Abu Dhabi at 12:12 p.m. The stock has tumbled 44 percent this year, compared with a 45 percent slump for the ADX Energy Index, and a 26 percent decline for the ADX General Index.

``Given the decline in oil and gas prices, the company's whole strategy of buying assets at peak prices to get a near- term revenue/EPS boost is questionable,'' said Sarkar, who cut the price estimate for the share to 2.05 dirhams on Oct. 27.

Oil prices have tumbled more than 50 percent since reaching a record $147.27 on July 11. Crude for December delivery was trading at $69.10 on the New York Mercantile Exchange.

Taqa said income from oil and gas sales rose almost six- fold to 2.05 billion dirhams in the third-quarter, driven by 1.4 billion dirhams from its Canadian unit known as TAQA North and 269 million dirhams from the Aberdeen-based unit TAQA Bratani. The company's total revenue for the period jumped 81 percent to 4.51 billion dirhams.

`Minimal Impact'

Taqa said it ``suffered minimal impact'' from the global credit crisis and the company has no refinancing requirements until 2010 as it has unused credit-lines of 14 billion dirhams, and cash and short-term cash deposits of 5.8 billion dirhams.

``Apart from an investment in the Carlyle Fund, we have no investments in financial papers, real estate, land and commercial companies other than investment in Taqa's subsidiaries and associates involved in oil and gas, gas storage, power generation and water desalination,'' Taqa Chairman Hamad Al Hurr Al Suwaidi said in the statement.

Taqa on Oct. 15 received approval to raise its capital by 50 percent to 6.22 billion dirhams by issuing convertible Islamic bonds, known as sukuk. The company in September converted 4.15 billion dirhams of bonds into shares.

To contact the reporters on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.netAyesha Daya in Dubai adaya1@bloomberg.net