Taqa Extends Rally on Speculation Abu Dhabi May Help After Loss

(Bloomberg) -- Shares in Abu Dhabi National Energy Co. soared for a second day amid investor speculation the government will step in after the oil company known as Taqa reported a record $5.2 billion loss.

The stock climbed 9.6 percent to 0.57 dirham, closing at the highest since Nov. 13, after adding 13 percent on Sunday. Trading volumes exceeded 15 million shares on both days, compared with a 30-day average of 1.1 million.

“There is a lot of speculation in the market now that the government of Abu Dhabi might step in somehow, and that's driving the surge," said Wada Al Taha, a Dubai-based advisory board member for the United Arab Emirates at the Chartered Institute for Securities & Investment. “The local government is certainly watching them closely, and wouldn't be surprising to see an announcement in the short-term."

A spokesman for Taqa, whose biggest shareholder is government-owned Abu Dhabi Water & Electricity Co., said it doesn't comment on market speculation. The spokesman pointed to a land-lease agreement valued at 18.7 billion dirhams ($5.1 billion) that the company signed, saying it had been “well received” by investors as it provides “a greater opportunity for Taqa shareholders to realize long-term value from their investment."

Taqa reported a loss of 19 billion dirhams amid one-time impairments for 2016. That compares with a loss of 1.8 billion dirhams in the year-earlier period.

Aside from signing the land-lease agreement with its biggest shareholder, Taqa's management is implementing a two-year transformation program that saved 13.2 billion dirhams, including a capital expenditure cut of 8.6 billion dirhams and a 25 percent reduction in global headcount or more than 1,000 positions.

“There is a restructuring plan in place,” said Ali Adou, a money manager at The National Investor in Abu Dhabi. “And obviously there is a strong government backing. The main issue with the company is high levels of debt on the balance sheet."

Read more:
Abu Dhabi' Taqa Posts $5.2 Billion Loss on Oil Asset Write-Off
Taqa No Longer Has Put Option to Sell Oil, Gas Assets, COO Says

To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Claudia Maedler, Shaji Mathew