Abu Dhabi National Energy Company PJSC TAQA Investor Presentation

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Title: Abu Dhabi National Energy Company PJSC TAQA Investor Presentation


1
Abu Dhabi National Energy Company PJSC (TAQA)
Investor Presentation
2
Disclaimer
These materials have been prepared by Abu Dhabi
National Energy Company - TAQA (Company).
Information contained in these materials has not
been independently verified by Citigroup Global
Markets Limited (Citi). Certain information
contained herein has been obtained from public
sources. Information not obtained from public
sources and contained herein is based on
information provided by the Company. Citi makes
no representation or warranty, express or
implied, as to the accuracy or completeness of
such information. These materials are for
information purposes only and do not constitute a
prospectus or offering circular or an offer to
acquire any securities and are not intended to
provide the basis for any credit or any third
party evaluation of any securities or any
offering of them and should not be considered as
a recommendation that any investor should
subscribe for or purchase any securities. The
information contained herein is preliminary as of
the date hereof, supersedes any previous such
information delivered to you and will be
superseded by any such information subsequently
delivered. Any investor who subsequently
acquires any securities must rely solely on any
final offering circular published in connection
with such securities, on the basis of which alone
purchases of or subscription for any securities
may be made. In addition, investors should pay
particular attention to any sections of any such
final offering circular describing any risk
factors. The information contained herein is
subject to change without notice and past
performance is not indicative of future
results. No person shall have any right of action
(except in case of fraud) against the Company or
any other person in relation to the accuracy or
completeness of the information contained
herein. The merits or suitability of any
securities to any investor's particular situation
should be independently determined by such
investor. Any such determination should involve
inter alia, an assessment of the legal, tax,
accounting, regulatory, financial, credit and
other related aspects of any securities. No
person is authorized to give any information or
to make any representation not contained in and
not consistent with these materials and, if given
or made, such information or representation must
not be relied upon as having been authorized by
or on behalf of the Company. These materials are
confidential and are being submitted to selected
recipients only. They may not be taken away,
reproduced (in whole or in part), distributed or
transmitted to any other person without the prior
written consent of the Company. These materials
are not intended for distribution to, or use by
any person or entity in any jurisdiction or
country where such distribution or use would be
contrary to local law or regulation. These
materials do not constitute or form part of an
offer of or invitation to sell or issue or any
solicitation of any offer to purchase or
subscribe for any securities for sale in any
jurisdiction nor shall they (or any part of them)
or the fact of their distribution form the basis
of, or be relied upon in connection with, or act
as any inducement to enter into any contract or
commitment therefor. Recipients of these
materials who intend to purchase such securities
are reminded that any such purchase or
subscription must be made solely on the basis of
the information contained in the Prospectus in
its final form. These materials do not constitute
an offer of securities for sale in the United
States. The securities referred to herein have
not been and will not be registered under the US
Securities Act of 1933, and may not be offered or
sold in the United States absent registration
there under or pursuant to an available exemption
from registration. These materials are not being
distributed to, and must not be passed on to, the
general public in the UK. Rather, the
communication of these materials as a financial
promotion is only being made to those persons
falling within Article 12, Article19(5) or
Article 49 of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, or to
other persons to whom these materials may
otherwise be distributed without contravention of
section 21 of the Financial Services and Markets
Act 2000, or any person to whom it may otherwise
lawfully be made. These materials are being
directed only at persons having professional
experience in matters relating to investments and
any investment or investment activity to which
these materials relate will be engaged in only
with such persons. No other person should rely on
it. These materials contain, or may be deemed to
contain, "forward-looking statements". By their
nature, forward-looking statements involve risks
and uncertainties because they relate to events
and depend on circumstances that may or may not
occur in the future. The future results of the
Company may vary from the results expressed in,
or implied by, the following forward looking
statements, possibly to a material degree. Any
investment in securities is subject to various
risks, such risks should be carefully considered
by prospective investors before they make any
investment decisions. Citi and/or its
subsidiaries and affiliates may act as
underwriter, placement agent, advisor or lender
to the Company and/or its affiliates. Citi and/or
their affiliates, subsidiaries or employees may
hold a position in any securities or financial
instruments of the Company.
3
Our Speakers
Peter E. Barker-Homek Chief Executive Officer
  • Over 26 years of professional experience
  • Involved in more than US30 billion of energy
    related transactions
  • Former Senior Advisor in Merger and Acquisitions
    at BP plc
  • Other experience
  • BG International
  • Merrill Lynch
  • Over 30 years of professional experience
  • Involved in restructuring of Enrons
    international businesses
  • Extensive energy background that spans the entire
    value chain from upstream exploration and
    production to downstream utility distribution
  • Successfully project financed over 10 independent
    power plants

William W. Reynolds Chief Financial Officer
4
Agenda
5
Transaction Highlights
Issuer
  • Abu Dhabi National Energy Company (TAQA)

Type of Offering
  • 144A / Reg S issue pursuant to a Global Medium
    Term Note Programme

Ranking
  • Senior

Currency
  • USD

Tenor
  • 5 and 10 year US benchmark transactions are
    expected

Rating
  • Aa2 by Moodys / AA- by SP

Key Covenants
  • Change of control put at par should direct /
    indirect ownership by the Government of Abu Dhabi
    fall below 501

Use of Proceeds
  • General corporate purposes, including the
    repayment of debt

Listing
  • UKLA listing

Bookrunner
  • Citi

1
6
TAQA Corporate Overview
7
Overview of the United Arab Emirates (UAE)
  • Composed of seven states or Emirates
  • Population of 5.03 million (2006) 80
    expatriate
  • High degree of domestic stability and strong
    external relationships through economic,
    political, and security arrangements
  • Second largest economy in the Gulf Cooperation
    Council (GCC) region, after Saudi Arabia
  • The least oil dependent economy in the GCC with
    non-oil sectors contributing more than 70 of
    GDP, mostly derived from service sectors
  • Nominal GDP of US162.2 billion (2006 estimate),
    estimated to reach US187 billion in 2007
  • Real GDP growth over 8 during 2003-06, 6 in
    2007-08
  • GDP per capita is one of the highest in the world
    at US31,500 (2006)
  • Large fiscal and external current account
    surpluses
  • Government overseas assets in excess of US250
    billion
  • Fixed exchange rate constant at AED 3.673 US 1
    for the last 23 years

Key Economic Indicators
Sources EIU, CIA Factbook, Moodys, IMF, Abu
Dhabi Department of Planning and Economy, ADIC,
UAE Central Bank.
2
8
Abu Dhabi A Hydrocarbon Power House
Abu Dhabis Sovereign Rating
  • Abu Dhabi is the capital of the UAE and the
    largest of the seven Emirates, occupying nearly
    87 of the land area
  • The ruler of Abu Dhabi H.H Sheikh Khalifa bin
    Zayed Al Nahyan is also President of the UAE
  • Abu Dhabis oil reserves are estimated at 92.2
    billion barrels, and natural gas reserves at
    198.5 (tcf), expected to last over 100 years
  • Development strategy geared towards further
    diversification of the economy

SP
Fitch
Moody's
Gas Reserves and Market Share
Oil Reserves and Market Share
300
20
Source US Department of Energy,
http//uae-embassy.org/html/oil.htm
10/05/2006. Abu Dhabi has approximately 95 of
the UAEs oil and gas reserves.
3
9
TAQA Strong Government Support and Ownership
  • TAQA enjoys the backing of the Abu Dhabi
    Government by virtue of its ownership, Board of
    Directors and importance to Abu Dhabis economy
    and development

Government Ownership and Support
  • TAQA is 75 owned by the Government of Abu Dhabi
    through the Abu Dhabi Water Electricity
    Authority (ADWEA), owning 51, and the Fund For
    Support of Farm Owners in the Emirate of Abu
    Dhabi (FSFOEAD), owning 24
  • As the provider of 85 of Abu Dhabis power
    supply, TAQA provides a vital domestic role
  • TAQA is one of the largest companies on the ADSM,
    and is the Government of Abu Dhabis flagship
    corporation and conduit for investment in the
    global power and energy sectors

Prominent and Experienced Board of Directors
H.E. Hamad Al-Hurr Al-Suwaidi Chairman
H.E. Ahmed Saif Al-Darmaki Vice Chairman
H.E. Salem Al-Sayaari Board Member
H.E. Mohammed Foulad Board Member
H.E. Abdulla Saif Al-Nuaimi Board Member
4
10
TAQA An Emerging Global Energy Player
  • Established in 2005 to consolidate the
    governments shareholding in Abu Dhabis domestic
    water and power generation assets
  • TAQA is the essential energy and water provider
    in the Emirate of Abu Dhabi, where capacity
    requirements are growing strongly
  • TAQA has since grown into an Aa2 rated, publicly
    listed, global energy company and is the
    government's investment conduit in the global
    energy sector
  • Since 2006, the firm has expanded its operations
    and investments in the oil gas, power and water
    generation, and infrastructure sectors across the
    Middle East, North Africa, India, Europe and
    North America

Government of Abu Dhabi
Public Shareholders
25
75
Downstream
Midstream
Upstream
Financial Highlights
Operational Highlights
Note Production figures as of June 2007.
Reserve figures as of December 2006.
5
11
TAQA Business Strategy
12
Building a Balanced, Fully Integrated Global
Energy Company
To build a global energy company by investing in
opportunities across the energy value chain
Strategic objective
Leverage secure domestic position
Secure domestic market position provides optimal
springboard for international expansion Maximise
group-wide and global energy expertise
Prudent growth strategy
Acquire quality regional and international
upstream, midstream and power / utility assets to
capture growth across the value chain Target
markets with limited political, price and volume
risks, but significant resource potential
Rigorous investment criteria
Strategic and financial investments in companies
that fit with TAQAs business objectives and can
be significantly enhanced by the groups
operational expertise Minimize risk by focusing
on quality assets with existing cash flows
Operational excellence through speed of
integration and ability to capture value creating
synergies Complementary base of performing energy
assets with newly acquired skills
sets Established portfolio risk management
function to ensure operational integrity is
maintained
Acquisition integration
Management priority is to ensure strong and
stable credit rating (Aa2 / AA- (Moody's/SP)) is
not compromised Robust financial position
underpinned by performing assets
Solid financial position
6
13
Leverage Secure Domestic Position
TAQAs domestic business is characterised by
low-risk utility operations underpinned by
quasi-government off-take agreements
Favorable Regulatory Framework
  • ADWEC has undertaken to purchase the entire net
    capacity of TAQAs plants under long term
    off-take agreements
  • ADWEC is expecting peak power demand to almost
    double by 2010 and triple by 2020, requiring
    major capacity expansion of which TAQA will be
    the main provider

Abu Dhabis Power Water Supply Industry
Structure
Growing Power and Water Demand
18,000
1200
16,000
1000
14,000
12,000
800
Gross MW
Gross MGID
10,000
600
8,000
6,000
400
4,000
200
2,000
0
0
2005
2008
2011
2014
2017
2020
Power forecasted capacity
Water forecasted capacity
Water required capacity
Power required capacity
7
Source Abu Dhabi Water and Electricity Company,
March 2006.
14
Geographic Expansion and Diversification
  • TAQA plans to build a diversified international
    portfolio of operations and investments, balanced
    across stable developed economies and growing
    emerging markets Peter Barker-Homek, CEO

Canada
United Kingdom
  • Oil gas exploration and production
  • Gas storage
  • Oil gas exploration and production
  • Pipelines

Russia
  • Oil gas investments
  • Oil gas production and exploration

United States
  • Infrastructure investments

Morocco
Netherlands
  • Power generation (1,257 MW)
  • Gas exploration and production
  • Gas storage

Ghana
  • Power generation (211MW)

India
  • Power generation (228 MW)
  • Infrastructure and power investments

Saudi Arabia
  • Power generation (246 MW)

UAE
  • Power generation and water desalination (6,222 MW
    590 MIGD)

Target Market
Ongoing Acquisitions / Investments
Existing Operations / Investments
8
15
Prudent Growth Strategy
May 2007 Established power generation
operations outside of the UAE, with the
acquisitions of CMS Generation (US900mn) and
ABBs (US490mn) interests in assets in Africa,
Middle East and India
Sep 2007 Plans to expand upstream presence in
Canada with agreement to acquire PrimeWest Energy
Inc. For US5bn
Aug 2007 Established upstream and midstream
presence in Canada with US2bn acquisition of
Northrock Resources
Sep 2006 Entered the North American market with
a US200mn investment in Carlyle Infrastructure
Fund
Jan 2007 Established European upstream and
midstream oil gas operations with US550mn
acquisition of Talisman Energys Brae assets
2007
2006
2005
Aug 2007 Continuing to build on upstream
presence in Canada with an agreement to acquire
Pioneer Canada for US540mn
Jul 2006 Initiated investment in the
international oil gas sector with investment in
Rosnefts IPO
May 2007 Consolidated power generation
activities in the UAE with US900mn acquisition
of CMS Generation
Nov 2006 Initiated investment in emerging
markets power sector through JV with India's ILFS
Jan 2007 Expanded European upstream midstream
presence with US694mn acquisition of BP Nederland
Energy
Power Generation
Investments
9
16
Focusing on Acquisition Integration and
Operational Excellence
While Targeting Operational Excellence
TAQAs Integration Priorities Are
  • Ensure continuity and integrity of operation
  • Identify value drivers and value creation
    opportunities
  • Committed to reach the highest standards of
    health / safety
  • Recordable Injury Rates (RIR) of operating
    subsidiaries compare favorably to an industry
    average rate of 5

As Seen By
To be Achieved Through
  • TAQA North
  • Carbon reduction of 13 in 2006
  • 2006 total RIR rate 3.65
  • TAQA New World
  • 4 of 6 power plants certified under both ISO
    14001 and ISO 18001. Since certification,
    relevant plants have averaged better than 99
    compliance with air emissions limits
  • Since 1999 maintained an RIR of 1.65 or less. The
    year-to-date rate for 2007 is zero
  • TAQA Energy
  • ISO 14001 certification in place
  • 2006 injury frequency rate of 0.96 per 200,000
    hours
  • Ensuring that, while assets are focused on
    operations / optimal local flexibility, a
    corporate control / support centre upholds best
    practice across the organization
  • Undertaking a comprehensive inventory of skill
    sets that seek to identify, classify and quantify
    best practices
  • Building a management information system that
    allows maximum transparency in respect of
    financial and operational performance
  • Capturing all synergies, identifying innovation
    and isolating potential improvements in acquired
    assets
  • Defining and embedding TAQAs identity
    fostering teamwork and exchange of skills

10
17
Operational Overview
18
TAQAs Operational Structure
Oil Gas - Upstream Midstream
Domestic Generation Assets
International Generation Assets
Emirates CMS Power Co. (1)
Jorf Lasfar (Morocco)
94
100
TAQA Energy (Netherlands)
100
Shuweihat CMS Intl. Power Co.
Neyveli (India)
74
100
TAQA Bratani (UK)
100
Taweelah Asia Power Co.
54
Takoradi (Ghana)
90
TAQA North (Canada)
100
Gulf Total Tractebel Power Co.
54
Jubail (Saudi Arabia)
25
Arabian Power Co.
Notes The above does not reflect the
organizational structure of the legal entities
owning the various business units. The ownership
percentages reflect TAQAs effective ownership
stakes in the producing assets held directly and
through subsidiaries. (1) Current ownership of
Emirates CMS Power is prior to the close of the
40 sale to Marubeni announced on Oct.1st, 2007.
Upon completion of the transaction TAQAs
effective ownership would be reduced to 54.
54
Emirates SembCorp Water Power Co.
54
11
19
Power Generation
Domestic
International
Taweelah A2
Taweelah A1
Taweelah B
Shuweihat S1
Um al Nar
Fujairah
Jorf Lasfar
Neyveli
Takoradi
Jubail
Domestic
International
12
20
Energy
Transactions not closed yet, expected closing
date end of 2007
TAQA Energy
TAQA Bratani
TAQA North
Netherlands Assets
Brae Assets
Pioneer Canada Subs
Northrock Resources
PrimeWest Energy Trust
Ongoing Transactions
Completed Transactions
Notes (1) Estimated current figures provided by
the Seller. (2) Estimated figures
provided by the Seller. (3) Figures
sourced from 2007 Q2 quarterly report for
PrimeWest Energy Inc. (4) Estimated
figures as of Dec 2006.
13
21
Financial Overview
22
Solid Investment Grade and Financial Position
TAQA has an open, ongoing and constructive
dialogue with the rating agencies TAQA seeks to
maintain and enhance its credit ratings Peter
Barker-Homek
  • Only invest in high quality assets in stable and
    attractive markets
  • Raise additional debt to invest in strategic
    growth opportunities Landmark USD and EUR bond
    Issues in 2006
  • Maintain conservative financial and risk
    management strategies

Derivative Risk Management
Treasury Risk Management
Capital Structure
Reliance on debt capital markets for fund
raising, while maintaining a stable capital
structure
Established function for portfolio risk
management roll-out of best in class internal
auditing function implementing a best in class
treasury function
Limited use of derivatives (only when necessary)
emphasis on managing TAQAs cost structure and
avoiding high risk investment opportunities
(1) Based on financial position as at June 30th
2007 adjusted for July August 2007 cash
movement.
14
23
Summary Income Statement
(1) Excludes US164mn interest income from IPO
bank deposits.
Performance Progression
H1 2007 Revenue Breakdown
US millions
Source Company annual reports and management
accounts. FX3.673 peg to US 1
15
24
Summary Balance Sheet
(1) Net Debt includes Current Islamic and
interest bearing loans, non-current Islamic and
interest bearing loans, less cash and current
finance lease receivables.
  • TAQA issued a three-tranche US3.5 billion bond
    in Q4 2006
  • Growth in H1 2007 PPE reflect primarily BP
    Netherlands and CMS Generation / ABB acquisitions

Key Credit Ratios
Balance Sheet Evolution
60
62
47
US billions
Source Company annual reports and management
accounts. FX3.673 peg to US 1
16
25
Summary Cash Flow Statement
(1) Includes Islamic loans, acquisition net
movement of minority interests, share capital
contribution, dividend payments, and loans from
minority interests. (2) Excludes bank overdraft
and restricted cash.
Operating Cash Flows
364
358
  • Acquisitions closed in H1 2007 were accretive to
    earnings and operating cash flows

US millions
93
44
Source Company annual reports and management
accounts. FX3.673 peg to US 1
17
26
Investment Summary
27
Investment Summary
Government Ownership Support
Solid Investment Grade Financial Position
Attractive UAE Power Market
Prudent Growth Strategy
Experienced Management
Operational Integration Focus
18
28
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