ABU DHABI NATIONAL ENERGY COMPANY TAQA MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) Q November 13,2012. Table of Contents

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1 ABU DHABI NATIONAL ENERGY COMPANY TAQA MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) Q November 13,2012 Table of Contents 1. Summary of Quarterly Results Business Environment Executive Summary Results of Operations Capital Structure and Liquidity Operational Data Summary of Quarterly Results (AED millions, except per share amounts) 30-Sep 30-Jun 31-Mar 31-Dec 30-Sep 30-Jun 31-Mar 31-Dec Total assets Shareholders equity 114, , , ,693 12,937 12,454 14,492 12,590 Revenues 8,833 6,042 5,743 5,444 Profit (loss) for the period (72) (250) Attributable to noncontrolling interests Attributable to equity holders of the parent (288) (380) 114, , , ,059 12,420 16,063 16,261 15,238 6,168 7,069 5,480 6, Earnings per share (AED per share) (0.047) (0.061) Business Environment Average prices 30-Sep 30-Jun 31-Mar 31-Dec 30-Sep 30-Jun 31-Mar WTI crude oil US$/bbl Brent crude oil US$/bbl NYMEX natural gas US$/mmbtu AECO natural gas CA$/GJ Exchange Rate 30-Sep 30-Jun 31-Mar 31-Dec 30-Sep 30-Jun 31-Mar 31- Dec US $/Cdn $ US$ US $/British pound US$ US $/Euro US$ US $/Moroccan dirham US$

2 3. Executive Summary The global economy continued to be volatile in the third quarter, particularly with respect to commodity prices. Natural gas prices in North America continued to weaken and both Brent and WTI crude oil saw softening compared with the same period last year. TAQA s nine month results continued to show strong profitability, demonstrating the resilience of its global portfolio. The strong performance of the Power & Water business has helped to ease the effect of the weaker commodity price environment particularly in North America. The Power & Water business delivered a solid operational performance. In particular, the Shuweihat 2 plant, the newest in the portfolio, recorded a forced outage rate of only 0.5% during the third quarter. Similarly, the rate for the coal-fired Jorf Lasfar plant in Morocco was 3%, well below best in class worldwide standards. The Oil & Gas business had mixed results with a solid performance from the UK and Dutch entities while the North American business continued to show weak results. North American natural gas prices were 40% lower during the third quarter of 2012 compared with the same quarter last year, though some improvement has been seen post period. This prolonged cycle of low natural gas prices has presented a number of arbitrage opportunities, particularly in switching from coal to natural gas-fired power plants. There are reasons to believe that the wide discounts for North American natural gas will diminish in the long term, particularly with the emergence of LNG export projects from Western Canada. Notwithstanding this outlook, TAQA has taken a number of actions to position its portfolio to weather the low part of the cycle. Firstly, a new President, Ed LaFehr, was appointed during the quarter to run the North American business. Mr LaFehr was previously Senior Vice President at Talisman Energy Inc. and brings a wealth of operational experience in the Western Canada Sedimentary Basin. Secondly, TAQA will continue to review its portfolio, either to monetise non-core acreage or, where valuations are low, acquire acreage and production in core areas. In October, TAQA completed an acquisition of oil and gas assets in central Alberta, Canada from NuVista for approximately C$162 million. The acquisition includes 45,700 hectares of land rights and approximately 5,800 boe/d of natural gas production rich in high-value liquids located adjacent the company s existing portfolio. Third, TAQA will continue to evaluate the economics of its on-going operations and future capital programmes. Year to date, the Company has shut-in approximately 1,500 boe/d of unprofitable production. Additionally, the 2013 capital programme has been reduced by 30% compared with 2012, subject to approval from the Board of Directors in December. Finally, the business will be subject to continuous cost review to ensure it maximises the efficiency of its operational costs and overhead. In terms of liquidity, TAQA is well positioned for the future with approximately AED 18 billion in cash and unused credit facilities at the end of the third quarter. TAQA recently launched the syndication of the refinancing of its $2 billion revolving credit facility due to expire in The syndication is proceeding well with strong interest from a large number of banks. Looking forward, TAQA is well positioned for growth. In the Power & Water business, TAQA announced that the Government of the Republic of Turkey and the Government of the Emirate of Abu Dhabi signed a joint declaration expressing their strong support for the cooperation between EÜAŞ (Electricity Generation Co. Inc.) and TAQA regarding an investment in, and optimisation of, existing lignite power plants in the Afşin-Elbistan region of southern 2

3 Turkey and the development of mining sites and new power generating facilities in the same region. In the Kingdom of Saudi Arabia TAQA, along with consortium partners Qatar Electricity and Water Company and Samsung Engineering, submitted the lowest tariff proposal for the development of the Rabigh 2 Independent Power Project in the Kingdom of Saudi Arabia. Rabigh 2 is a proposed greenfield heavy fuel oil power plant project with a capacity of approximately 2,000 MW. The project will be developed on a build-own-operate basis. In the Oil & Gas business, TAQA announced the discovery of a new oil accumulation in the UK Northern North Sea Contender Block. The exploration well was drilled from TAQA s North Cormorant platform and encountered an oil accumulation that is expected to correspond to million barrels of oil in place. The field is expected to be processed through the North Cormorant platform. TAQA owns a 60% interest in and is the operator of the block. 4. Results of Operation Power and Water Revenues: (AED millions) Revenue from electricity and water 2,067 1,927 6,030 5,400 Fuel revenue 952 1,158 2,890 4,157 Net Liquidated damages received Construction Revenue 2,814-2,814 - Other operating revenues ,860 3,156 11,790 9,732 TAQA generates its revenues primarily from power generation, water desalination, power plant construction, fuel revenues, liquidated damages, and other operating revenues. ended 30 September 2012 compared with three months ended 30 Revenues from the sale of electricity and water were AED 2,067 million in 2012 compared to AED 1,927 million in 2011, an increase of AED 140 million. The increase was primarily due to an increase in available capacity from the new plant Shuweihat 2 (which commenced phased production in July 2011), contributing an increase of AED 155 million partly offset by small decreases at Jorf and Neyveli. Fuel revenues were AED 952 million in 2012 compared to AED 1,158 million in 2011, a decrease of AED 206 million. The decrease was mainly due to lower fuel revenues at domestic plants due to lower usage of back up fuel. This was partly offset by higher fuel driven by higher production at Takoradi. 3

4 Net liquidated damages were nil in 2012 compared to AED 50 million in 2011 at Shuweihat 2. Other operating revenues were AED 27 million in 2012 compared to AED 21 million in 2011 due to lower revenues from Jorf and Red Oak. Construction revenue recognised is in relation to the Jorf Lasfar expansion and is mostly offset with construction costs (2011 Nil). ended 30 September 2012 compared with nine months ended 30 Revenues from the sale of electricity and water were AED 6,030 million in 2012 compared to AED 5,400 million in 2011, an increase of AED 630 million, The increase was primarily due to an increase in available capacity from the new plant Shuweihat 2 (which commenced phased production in July 2011), contributing an increase of AED 662 million. This was partly offset by a decrease in international power due to capital cost adjustment, lower tariff and impact of devaluation of Euro. Fuel revenues were AED 2,890 million in 2012 compared to AED 4,157 million in 2011, a decrease of AED 1,267 million. Fuel revenues from domestic plants decreased by AED 1,774 million due to lower usage of back up fuel Fuel revenue was also lower at Red Oak. The decrease was partially offset by AED 485 million from higher production at Takoradi and AED 145 million at Jorf Lasfar due to higher coal prices. Net liquidated damages were nil in 2012 compared to AED 115 million in 2011 at Shuweihat 2. Construction Revenue recognised is in relation to the Jorf Lasfar expansion and is mostly offset against construction costs (2011-Nil). Other operating revenues were AED 56 million in 2012 compared to AED 60 million in 2011.The decrease is due to lower revenues at Jorf and Red Oak. Oil & Gas (AED millions) Revenue from oil and gas Gas storage revenue Other operating revenues 2,560 2,742 7,747 8, ,973 3,012 8,828 9,011 Oil and gas segment generate revenues primarily from upstream exploration and production, and midstream processing, transmission and storage. ended 30 September 2012 compared with three months ended 30 Revenue from oil and gas was AED 2,560 million in 2012 compared to AED 2,742 million in 2011, a decrease of AED 182 million. The stock movements recorded under cost of sales showed a variance of AED 114 million. The aggregate variance of AED 296 million is explained below: 4

5 Unfavorable impact of lower commodity prices: AED 225 million (of which AED 270 million was at TAQA NORTH); Unfavourable impact of lower production: AED 184 million (of which AED 106 million was at TAQA NORTH and AED 73 million at TAQA Bratani); Partly offset by, favourable impact of lower royalty payments at TAQA NORTH. Gas storage revenues were AED 5 million in 2012, compared to AED 9 million in 2011, the reduction in 2012 was primarily due to lower volumes and lower prices at TAQA North. Other operating revenues were AED 408 million in 2012 an increase of AED 147 million compared to The increase was primarily due to higher trade sales at TAQA Energy. ended 30 September 2012 compared with nine months ended 30 Revenue from oil and gas was AED 7,747 million in 2012 compared to AED 8,056 million in 2011, a decrease of AED 309 million. The stock movements recorded under cost of sales showed a variance of AED 377 million. The aggregate variance of AED 686 million is explained below: Unfavorable impact of lower commodity prices: AED 749 million (of which AED 827 million was at TAQA NORTH); Unfavourable impact of lower production: AED 180 million (of which AED 209 million was at TAQA NORTH and AED 57 million at TAQA Energy, partly offset by impact of higher production at TAQA Bratani); Partly offset by, favourable impact of lower royalty payments at TAQA NORTH. Gas storage revenues were AED 123 million in 2012 compared to AED 187 million in 2011, the reduction in 2012 was primarily due to lower volumes and lower prices at TAQA North. Other operating revenues were AED 958 million in 2012 compared to AED 768 million in 2011, increase by AED 190 million mostly due to higher trade sales at TAQA Energy. Cost of sales Power and Water TAQA s cost of sales for power units consist of depreciation depletion and amortisation, power plant construction costs, fuel expenses, and operating expenses. Operating expenses includes staff costs, repairs, maintenance and consumables used, operation and maintenance charges, and other operating expenses. (AED millions) Operating expenses Fuel expenses (492) (491) (1,420) (1,416) (855) (926) (2,631) (3,576) Construction Cost (2,731) - (2,731) - Depreciation, depletion and amortization (452) (407) (1,347) (1,157) (4,530) (1,824) (8,129) (6,149) 5

6 ended 30 September 2012 compared with three months ended 30 Operating expenses were AED 492 million in 2012 compared to AED 491 million in Fuel expenses were AED 855 million in 2012 compared to AED 926 million in 2011, a decrease of AED 71 million. The decrease was due to lower back up fuel used at U.A.E. subsidiaries of AED 182 million and lower fuel costs of AED 87 million at Jorf Lasfar and Red Oak offset by higher fuel cost of AED 188 million at Takoradi due to higher production. Construction costs are in relation to the Jorf Lasfar expansion. DD&A expenses were AED 452 million in 2012, compared to AED 407 million in 2011, an increase of AED 45 million. The new plant Shuweihat 2 contributed AED 39 million of the increase. ended 30 September 2012 compared with nine months ended 30 Operating expenses were AED 1,420 million in 2012 compared to AED 1,416 million in An increase of AED 4 million. Fuel expenses were AED 2,631 million in 2012 compared to AED 3,576 million in 2011, a decrease of AED 945 million due to lower back up fuel used at U.A.E. subsidiaries, lower fuel cost at Red Oak, offset by higher fuel cost at Jorf of AED 127 million due to higher coal prices and AED 485 million at Takoradi due to higher production. Construction costs are in relation to the Jorf Lasfar expansion. DD&A expenses were AED 1,347 million in 2012, compared to AED 1,157 million in 2011, an increase of AED 190 million. The new plant Shuweihat 2 contributed AED 160 million of the increase. Oil and gas Cost of sales for oil and gas units consist of operating expenses, gas storage expenses and depreciation, depletion and amortisation, and. Operating expenses includes staff costs, repairs, maintenance and consumables used, fuel expenses, and other operating expenses including adjustments for stock movements from period to period. (AED millions) Operating expenses (1,261) (924) (3,493) (2,693) Gas storage expenses (6) (10) (25) (82) Depreciation, depletion and amortization (916) (951) (2,744) (2,764) (2,183) (1,885) (6,262) (5,539 ) 6

7 ended 30 September 2012 compared with three months ended 30 Operating expenses were AED 1,261 million in 2012 compared to AED 924 million in 2011, an increase of AED 337 million. The increase was driven by AED 130 million due to stock movement (explained under revenue) and AED 71 million due to higher repair and maintenance costs at TAQA Bratani mainly due to Otter acquisition completed partly in July 2011 and partly in February 2012 and AED 150 million mainly due to higher trade costs at TAQA Energy. Gas storage expenses were 6 million in 2012 compared to AED 10 million in 2011, the decrease was due to lower volumes and prices at TAQA North. DD&A expenses were AED 916 million in 2012, compared to AED 951 million in 2011, a decrease of AED 35 million. The decrease was mainly at TAQA North due to lower production. ended 30 September 2012 compared with nine months ended 30 Operating expenses were AED 3,493 million in 2012 compared to AED 2,693 million in 2011, an increase of AED 800 million. The increase was driven by AED 390 million due to stock movement (explained under revenue), AED 100 million related to write off of exploration dry hole costs and AED 124 million due to higher repair and maintenance costs at TAQA Bratani mainly due to Otter acquisition completed partly in July 2011 and partly in Feb 2012 and AED 220 million mainly due to higher trade costs at TAQA Energy. Gas storage expenses were 25 million in 2012 compared to AED 82 million in 2011, the decrease of AED 57 million due to lower volumes and prices at TAQA North. DD&A expenses were AED 2,744 million in 2012, compared to AED 2,764 million in 2011, a decrease of AED 20 million. The decrease was due to lower depreciation of AED 153 as a result of lower production at TAQA North and TAQA Energy, this was partially offset by AED 133 million increase at TAQA Bratani due to higher production. Other Income Statement Items TAQA s administrative and other expenses consist of salaries and related expenses, professional fees, and other expenses. TAQA s finance costs primarily consist of interest expense on bank loans and outstanding bonds. The foreign exchange (loss) gain results from the translation of net monetary assets and liabilities of subsidiaries and the settlement of transactions denominated in currencies other than the functional currencies in the Group. 7

8 Power and Water (AED millions) Administrative and other expenses Finance costs Changes in fair value of derivatives Net foreign exchange (loss) gain Other income Gain on sale of joint venture Share of results of associates (52) (50) (195) (172) (634) (554) (1,911) (1,596) (35) (623) (468) (1,829) (1,557) ended 30 September 2012 compared with three months ended 30 Administrative and other expenses were AED 52 million in 2012, slightly higher than AED 50 million in Finance costs were AED 634 million in 2012 compared with AED 554 million in 2011, an increase of AED 80 million. The new plant Shuweihat 2 contributed AED 72 million of the increase. Net mark to market movement in fair value of derivatives was AED 60 million in 2012 compared to AED 45 million in The variance of AED 15 million was primarily due to more favourable movement at Red Oak mainly due to higher spark spread (net of hedges) in Net foreign exchange losses in 2012 were AED 35 million, compared to gain of AED 84 million in The variance was primarily due to exchange rate fluctuations between US Dollar (USD) and Indian Rupee (INR) relating to revaluation of operating financial assets investment at Neyveli, and between USD and Morocco Dirham (MAD) relating to revaluation of MAD loans at Jorf. Other income was AED 36 million in 2012 compared to AED 4 million in Higher other income in 2012 was as a result of other income on the bridge loan at Jorf. ended 30 September 2012 compared with nine months ended 30 Administrative and other expenses were AED 195 million in 2012 compared to AED 172 million in 2011, an increase of AED 23 million mainly due to higher administrative expenses at Jorf. Finance costs were AED 1,911 million in 2012 compared with AED 1,596 million in 2011, an increase of AED 315 million. The new plant Shuweihat 2 contributed AED 323 million of the increase which was partially offset by lower finance cost in other power units due to lower debt. 8

9 Net mark to market movement in fair value of derivatives was AED 191 million in 2012 compared to AED 104 million in The variance was primarily due to more favourable movement at Red Oak due to higher spark spread (net of hedges) in Net foreign exchange gain of AED 3 million in 2012 compared to gain of AED 55 million in The variance was primarily due to exchange rate fluctuations between US Dollar (USD) and Indian Rupee (INR) relating to revaluation of operating financial assets investment at Neyveli, and between USD and Morocco Dirham (MAD) relating to revaluation of MAD loans at Jorf. Other income was AED 79 million in 2012 compared to AED 17 million in Higher other income in 2012 was as a result of other income on the bridge loan at Jorf, The gain in 2011 of AED 28 million was from the sale of Marubeni assets in January Oil and gas (AED millions) Administrative and other expenses (143) (132) (405) (368) Finance costs (106) (121) (315) (285) Changes in fair value of derivatives (22) Net foreign exchange (loss) gain (30) 45 (11) 27 Gain (loss) on asset sale Bargain purchase gain Other income Share of results of joint venture (245) (59) (130) (358) ended 30 September 2012 compared with three months ended 30 Administrative and other expenses were AED 143 million in 2012 compared to AED 132 million in 2011, an increase of AED 11 million due to higher administrative expense at TAQA North by AED 22 million partially offset by lower administrative cost at TAQA Bratani by AED 11 million. Finance costs were AED 106 million in 2012 compared with AED 121 million in 2011 a decrease of AED 15 million. The decrease was mainly due to lower accretion expenses of AED 21 million at TAQA Energy, partially offset by higher accretion expenses at TAQA Bratani of AED 8 million. Net mark to market movement in fair value of derivatives at TAQA North was unfavourable at AED 22 million in 2012 compared to favorable AED 94 million in The higher favourable variance in 2011 was due to a bigger portfolio of outstanding oil hedge positions revaluing on a more volatile (quarter over quarter) WTI price environment. Net foreign exchange losses were AED 30 million in 2012 compared to exchange gains of AED 45 million in The variance was primarily due to exchange rate fluctuations 9

10 between US Dollar (USD) and British Pound (GBP) relating to revaluation of net monetary liabilities at TAQA Bratani. A gain on assets sale of AED 11 million relates to disposition of specific zonal rights at TAQA North. Other Income was AED 12 million in 2012 compared to AED 10 million in Earnings from share of results of joint venture, NoordGas Transport BV at TAQA Energy was AED 27 million in 2012, comparable to AED 26 million in ended 30 September 2012 compared with nine months ended 30 Administrative and other expenses were AED 405 million in 2012 compared to AED 368 million in 2011, an increase of AED 37 million. Of the increase of AED 65 million was at TAQA North due to increase in new long-term incentive benefit plan. Finance costs were AED 315 million in 2012 compared with AED 285 million in The increase of AED 30 million was mainly due to higher accretion expenses at TAQA North. Net mark to market movement in fair value of derivatives at TAQA North was favourable at AED 24 million in The higher favourable variance in 2011 was due to a bigger portfolio of outstanding oil hedge positions revaluing on a more volatile WTI price environment. Net foreign exchange losses were AED 11 million in 2012 compared to exchange gains of AED 27 million in The variance was primarily due to exchange rate fluctuations between US Dollar (USD) and British Pound (GBP) relating to revaluation of net monetary liabilities at TAQA Bratani. Gains on assets sale of AED 385 million in 2012 was at TAQA North, related to the divestments on sale of certain non-core land holdings and operating assets, compared to AED 80 million in Bargain purchase gain of AED 100 million in 2012 was recognised on completion of phase 2 of acquisition of Otter field and associated infrastructure primarily due to the change in fair values between the economic date of the agreement (1 September 2009) and the legal completion date when purchase accounting was applied. Earnings from share of results of joint venture at NoordGas Transport BV at TAQA Energy was AED 73 million in 2012, compared to AED 85 million in Lower earnings in 2012 were primarily due to higher depreciation in Corporate Interest and Other Group financing (including finance costs except for the subsidiaries involved in power and water generation with project financing arrangements and interest income) is managed on a group basis and is not allocated to operating segments. Investment in certain associates with activities other than power and water generation and oil and gas and available for sale investments are managed on a group basis and are therefore not allocated to operating segments. 10

11 (AED millions) Finance costs Administrative and other expenses Share of results of associates Gain on Sale of Available for sale Investment Impairment loss on available for sale Investment (501) (458) (1,528) (1,419) (56) (28) (121) (91) (83) - (83) - Others 58 (36) 126 (21) (557) (420) (1,072) (1,289) ended 30 September 2012 compared with three months ended 30 Corporate finance costs were AED 501 million in 2012 compared with AED 458 million in The increase was due to interest on Malaysian Sukuk bond issued in the first quarter of 2012 and USD bond Issued in end of The fixed term debt replaced short term bank loans that carried significantly lower interest rates. Corporate administrative and other expenses were AED 56 million in 2012 compared to AED 28 million in This is primarily due to increase in staff at corporate headquarters. Corporate earnings from share of results of associates was AED 25 million in 2012 compared to AED 102 million in 2011, a decrease of AED 77 million. The decrease was primarily due to lower earnings from Sohar Aluminum Company LLC driven by lower aluminum prices. Impairment loss of AED 83 million was recorded in 2012 due to a significant and prolonged decrease in fair value of two of the investments held by Carlyle fund. Other corporate income was AED 58 million in 2012 compared to expense of AED 36 million in The variance was mainly due to foreign exchange gains in the third quarter of 2012 and gains on forward foreign exchange contracts. ended 30 September 2012 compared with nine months ended 30 Corporate finance costs were AED 1,528 million in 2012 compared with AED 1,419 million in The increase was due to interest on Malaysian Sukuk bond issued in March 2012 and USD bond issued in end of The fixed term debt replaced short term bank loans that carried significantly lower interest rates. Corporate administrative and other expenses were AED 121 million in 2012 compared to AED 91 million in 2011, the increase was mainly due to increase in staff cost at corporate headquarters. Corporate earnings from share of results of associates were AED 119 million in 2012 compared to AED 242 million in 2011, a decrease of AED 123 million. The decrease was 11

12 primarily due to lower earnings from Sohar Aluminium Company LLC driven by lower aluminum prices Gain on sale of available for sale Investment relates to AED 415 million sale of all holdings in Tesla Motors, a listed investment outside U.A.E on 8 April Impairment loss of AED 83 million was recorded in 2012 due to a significant and prolonged decrease in fair value of two of the investments held by Carlyle fund. Other corporate income was AED 126 million in 2012 compared to expense of AED 21 million in The variance was mainly due to foreign exchange gains of AED 74 million in 2012 compared to losses in 2011,a dilution gain from western zagros of AED 23 million and gains on forward foreign exchange contracts. Profits and Taxes (AED millions) Profit before taxes 695 1,513 3,196 3,851 Income tax expenses (767) (702) (1,941) (2,017) Profit after taxes(before non-controlling interest) (72) 811 1,255 1,834 ended 30 September 2012 compared with three months ended 30 Profit before tax Profit before tax for the third quarter of 2012 was AED 695 million, compared to a profit before tax of AED 1,513 million in third quarter of 2011, a decrease of AED 818 million or 54%. Income Tax For the third quarter 2012, income tax expense was AED 767 million, comprised of AED 556 million current income tax expense and AED 211 million deferred income tax expense, resulting in an effective tax rate of 110%. For the third quarter 2011, income tax expense was AED 702 million, comprised of AED 670 million current income tax expense and AED 32 million deferred income tax expense, resulting in an effective tax rate of 46%. The higher effective tax rate when compared with the previous year is primarily driven by oneoff tax charges on the group s UK oil and gas operations recorded in Q3, The underlying change in the UK s tax legislation was originally announced in March 2011, with a part of the announced changes being formally enacted at that time and the remainder being formally enacted in the third quarter of Profit for the period Loss for the period (before non-controlling interest) was AED 72 million for the third quarter 2012 compared with the profit for 811 million for the third quarter

13 ended 30 September 2012 compared with nine months ended 30 Profit before tax Profit before tax for the nine months ended 30 September 2012 was AED 3,196 million, compared to a profit before tax of AED 3,851 million for the same period 2011, a decrease of AED 655 million or 17%. Income Tax For the nine months ended 30 September 2012, income tax expense was AED 1,941 million comprised of AED 1,871 million of current income tax and deferred income tax of AED 70 million, resulting in an effective tax rate of 61%. For the year ended 30, income tax expense was AED 2,017 million comprised of current income tax expense of AED 1,915 and AED 102 million of deferred income tax expense, resulting in an effective tax rate of 52%. The higher effective tax rate when compared with the previous year is primarily driven by oneoff tax charges on the group s UK oil and gas operations recorded in Q3, The underlying change in the UK s tax legislation was originally announced in March 2011, with a part of the announced changes being formally enacted at that time and the remainder being formally enacted in the third quarter of Profit for the period Profit for the period (before non-controlling interest) was AED 1,255 million compared with the profit of AED 1,834 million for the nine months ended 2011 and decrease of 32%. 5. Capital Structure and Liquidity Capital Structure Nine month ended Sept 30 (AED millions) Total assets 114, ,200 Total debt 72,866 73,517 Cash and cash equivalents 3,517 4,011 Net debt 69,349 69,506 Total equity 12,937 12,420 Net debt/net capital % 76.7% 77.3% Total assets were AED billion at the end of September 2012, up from AED billion at the end of. The minor increase in total assets was due to divestments and impairments of certain noncore assets in Canada in January 2012 and December 2011 respectively, sale of Tesla Motors in April 2012 and devaluation of Euro. This was partly offset by the acquisition of an additional 50% undivided interest in Otter field in February 2012, investment of AED 171 million in WesternZagros in October 2011, completion of the Shuweihat 2 plant, and expansion of the Jorf Lasfar project in Morocco and the appreciation of the Canadian Dollar (CAD). Total net debt decreased by AED 157 million mainly due to AED 1.8 billion proceeds of sale from divestments made in TAQA North and sale of Tesla Motors (AED 956 million) offset by 13

14 issuance of Malaysian Sukuk bond in March 2012 (AED 794 million) and capital expenditure at Jorf. TAQA s net debt to net capital ratio was 76.7% at the end of September 2012 compared with 77.3% at the end of. Liquidity Nine month ended Sept 30 (AED Millions) Cash and cash equivalents 3,517 4,011 Unused portion of credit facilities 14,753 11,549 Total available liquidity 18,270 15,560 Consolidated cash on hand as of 30 September 2012 was AED 3.5 billion compared with AED 4.0 billion at the end of 30. The company had unused credit lines of AED 14.8 billion as of 30 September 2012, compared to AED 11.6 billion as of 30. The increase in available liquidity was due to reduced borrowings from credit facilities from bond issues during the period - USD1.5bn bonds, and MYR 650m (USD215m) bonds, and proceeds from the divestments of assets at TAQA North and Tesla Motors. This is offset by buyback of US$ 589 million worth of bonds. 6. Operational Data Power & Water UAE domestic plants Power generation (GWh) 18, ,272 36,678 Water desalination (MIG) 64,930 57, , ,931 Technical availability (%) 98.24% 96.40% 95.57% 94.53% International plants Power generation (GWh) 5,496 3,649 15,825 10,682 Technical availability (%) 96.80% 90.80% 94.40% 90.30% 14

15 Upstream Pricing Average Realised Prices TAQA NORTH Crude oil Natural gas liquids Natural gas Average TAQA Bratani Crude oil Natural gas liquids Natural gas Average TAQA Energy Crude oil Natural gas Average (US$/bbl) (US$/bbl) (US$/mcf) (US$/boe) (US$/bbl) (US$/bbl) (US$/mcf) (US$/boe) (US$/bbl) (US$/mcf) (US$/boe) Oil & Gas Production Average Daily Production TAQA North Crude oil (mbbls/day) Natural gas liquids (mbbls/day) Natural gas (mmcf/day) Average (mboe/day) TAQA Bratani Crude oil (mbbls/day) Natural gas liquids (mbbls/day) Natural gas (mmcf/day) Average (mboe/day)

16 Average Daily Production TAQA Energy Crude oil (mbbls/day) Natural gas (mmcf/day) Average (mboe/day) Netback Analysis (US$/boe) TAQA NORTH Gross price Royalties Net sales price Operating costs Operating netback TAQA Bratani Gross price Net sales Operating costs Operating netback TAQA Energy Gross price Royalties Net sales price Operating costs Operating netback Carl Sheldon Chief Executive Officer Abu Dhabi National Energy Company 16