The UK government's raising of taxes on North Sea oil production helped to cut Taqa's first-quarter profit almost in half.
Comment: In oil and gas, risks at every turn
Tamsin Carlisle // Sharply divergent profit paths for Taqa and the Austrian petroleum group OMV show that oil and gas producers face political risks in developed countries that can be at least as high as in emerging economies.
OMV, which is 20 per cent owned by Abu Dhabi’s International Petroleum Investment Company, yesterday posted a 5 per cent increase in first-quarter profit to €365 million (Dh1.93 billion), despite the loss of most of its Libyan oil output.
Taqa, which said its operations in the Middle East and North Africa were virtually unaffected by unrest, suffered a net fall in profit of 47 per cent because of an unexpected increase in UK taxes on oil and gas production.
“The first quarter of 2011 proved to be a very difficult one, where a strong operating performance was overshadowed by political turmoil in North Africa and the Middle East,” said Gerhard Roiss, the OMV chief executive.
The markets will judge which company performed better last quarter and which had the greater risk exposure.
First-quarter profit for the oil, gas and power group controlled by the Government of Abu Dhabi fell to Dh152 million (US$41.3m) for the first three months of this year. That was 47 per cent lower than in the first quarter of last year. Revenue rose 15 per cent to Dh5.5 billion.
Yesterday, shares of Taqa, also known as Abu Dhabi National Energy Company, fell 1.43 per cent to Dh1.38 - their eighth consecutive trading decline. The stock has lost 6.7 per cent so far this year.
In mid-March, the UK government increased taxes on North Sea oil and gas operations by 12 per cent, backdated to January 1.
"This contributed to a 53 per cent year-on-year increase in tax, negatively affecting net profit," Taqa said.
The tax change reduced the company's earnings for the quarter by Dh150m, Doug Fraser, the chief financial officer, estimated. "It will continue to impact our results."
Under the new tax regime, Taqa pays more than 70 per cent of its pre-tax income from UK North Sea oil and gas production to Westminster.
"We didn't see this coming," Mr Fraser said. "We were aware of the fact that the UK government was a bit stressed [and] so would be looking for ways to raise revenue, but we were certainly surprised."
For the moment, Taqa remains committed to its previously budgeted $500m investment programme in the UK North Sea this year, but the plan could be reviewed.
"We're a global business with a capital budget of $2bn this year, all from internally generated cash flow," Mr Fraser said. "We can discuss where to deploy our capital. It's safe to say that the UK government has made the investment environment less attractive. Regarding our ongoing spending, we will evaluate this business compared to the attractiveness of other areas."
Taqa was participating in UK oil industry lobbying efforts to persuade the government to reverse the tax increase.
In their latest monthly oil market report, released yesterday, Opec analysts predicted that UK oil supply would decline by 60,000 barrels per day (bpd) this year to an average of 1.41 million bpd. That was a 10,000 bpd downward revision from their forecast last month, reflecting a 25 per cent drop in first-quarter drilling activity.
"The increased tax on producers has pushed some firms to delay their investment in the UK," Opec said.
Taqa's first-quarter profit before tax rose 11 per cent to Dh961m, despite foreign exchange losses.
The company attributed the rise to increased oil and gas output and higher power and water revenues after the start-up of the Fujairah-2 electricity and desalination plant in the UAE. The integrated power and water development, the second largest of its kind in the world, was inaugurated on Tuesday after a three-month commissioning period.
tcarlisle@thenational.ae
RESULT
Aston Villa 1
Samatta (41')
Manchester City 2
Aguero (20')
Rodri (30')
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Company profile
Name: Steppi
Founders: Joe Franklin and Milos Savic
Launched: February 2020
Size: 10,000 users by the end of July and a goal of 200,000 users by the end of the year
Employees: Five
Based: Jumeirah Lakes Towers, Dubai
Financing stage: Two seed rounds – the first sourced from angel investors and the founders' personal savings
Second round raised Dh720,000 from silent investors in June this year
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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Fire and Fury
By Michael Wolff,
Henry Holt
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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GCC-UK%20Growth
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The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
More coverage from the Future Forum
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
THE DETAILS
Kaala
Dir: Pa. Ranjith
Starring: Rajinikanth, Huma Qureshi, Easwari Rao, Nana Patekar
Rating: 1.5/5
MATCH INFO
World Cup qualifier
Thailand 2 (Dangda 26', Panya 51')
UAE 1 (Mabkhout 45 2')
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
SERIE A FIXTURES
Friday Sassuolo v Torino (Kick-off 10.45pm UAE)
Saturday Atalanta v Sampdoria (5pm),
Genoa v Inter Milan (8pm),
Lazio v Bologna (10.45pm)
Sunday Cagliari v Crotone (3.30pm)
Benevento v Napoli (6pm)
Parma v Spezia (6pm)
Fiorentina v Udinese (9pm)
Juventus v Hellas Verona (11.45pm)
Monday AC Milan v AS Roma (11.45pm)
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
