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Taqa Q2 Profit Tumbles 71pc

ABU DHABI — Abu Dhabi National Energy Co, or Taqa, which has been on an expansion spree, said on Thursday second-quarter net profit slumped 71 percent due to lower oil prices and higher operating costs.

Shares in Taqa, a state-run oil and power producer, rose 6.8 per cent on the Abu Dhabi bourse as investors reacted to the company’s view that higher crude since the end of the quarter augured well for its business.

Taqa posted profit of Dh136 million ($37.0 million) in the quarter ended June 30, down 71.2 per cent from 471.4 million in the prior-year period.

The results fell short of two analysts estimates who forecast earnings of Dh348 million and 289 million, in a Reuters survey.

In the first six months, Taqa said it had NET profit Dh176 million, down from 869 million last year.

Taqa cited the sharp decline in the oil price — U.S. crude was at $95 a barrel in early April 2008, while Brent crude hovered at $96 — for the slump in earnings. Oil prices peaked at a record $147 in July 2008 before tumbling to around $32 a barrel by December. Crude was at $71.28 on Thursday. The company said higher cost of sales linked to acquisitions it made last year also weighed on profits. “As the oil price has improved from its lowest point, our second-quarter performance has shown an improvement in comparison to the first three months of the year,” Taqa Chief Executive Officer Peter Barker-Homek said in a statement.

“With the oil price trending up to over $70 per barrel post-quarter, we are now a long way from the lows we saw earlier in the year.”

Revenue declined 4 per cent to Dh4.4 billion in the quarter.

It said oil and gas revenue fell 30 per cent, while revenue from its electricity and water business rose 14 per cent.