Abu Dhabi, UAE: Abu Dhabi National Energy Company (TAQA), releasing its 2016 first half consolidated financial results, has announced reducing H1 capex and cash costs by 73% and 14%, respectively.

Following are the highlights provided by the company:

• Free cash flow up 35% to AED 3.1 billion
• Power production up 6% to 39,090 GWh
• Oil and gas production steady at 147,400 boe/d
• 39% decline in realised oil and gas prices
• Revenues at AED 7.9 billion and EBITDA at AED 4.1 billion
• H1 capex and cash costs reduced by 73% and 14% respectively
• Total transformation savings to date exceed AED 6.5 billion
• USD one billion bond refinancing reduces annual financing costs by AED 70 million

As per the details provided by the company, revenues and EBITDA were down 19% and 21%, respectively, to AED 7.9 billion and AED 4.1 billion in the first half of 2016. Explaining the cause behind the drop, the company said it was due primarily to the 39% drop in realised oil and gas prices and resulted in a net loss of AED 1.2 billion compared to a net loss of AED 165 million in H1 2015. Net profit was also negatively impacted by the absence of the one-off AED 555 million United Kingdom tax credit booked in H1 2015, it added.

The company said that it has achieved more than AED 6.5 billion in cash cost and capex savings under its cost transformation programme which was launched in 2015. Capital expenditure for H1 2016, the company said, was reduced by AED 1.3 billion or 73% compared to H1 2015, due to the completion of major projects in 2015 as well as to cut discretionary investment.

It also highlighted increasing its power production by six per cent, to a record high of 39,090 gigawatt hours, while technical availability increased to 92%.

Despite significant cuts in capital expenditure, TAQA said that it minimised the decline in production and produced 147.4 thousand barrels of oil equivalent per day (mboep/d), only 2% less than in H1 2015. Strong well performance and easing of third-party pipeline capacity restrictions helped the company increase production in North America by nearly 5% to 84.2 mboep/d, TAQA added.

“Our businesses have continued to demonstrate improving operational performance,” said Saeed Al Dhaheri, Acting Chief Operating Officer of TAQA. “Despite achieving significant costs reductions, including a 73% cut in capex, we safely maintained oil and gas volumes and increased power production above our previous record highs. The cost transformation programme has continued its momentum achieving more than AED 6.5 billion in savings since it started in 2015.”

He further said: “The highly successful $1 billion bond refinancing reduced our annual corporate interest payments by AED 70 million, and our free cash flow has continued to grow during the period. While our realised oil and gas prices dropped by 39%, the upstream business has adapted to the changes and continued to transform into a more resilient business able to compete in this tough environment.”