UPDATE 3-UAE's Taqa sticks with N.Sea even as costs rise

* Committed to North Sea despite company's rising costs

* Sees North Sea costs falling in Q3-Q4

* Shares up 6.83 pct, outlook better with oil price rise

(Recasts with quotes, background from conference call)

By Stanley Carvalho

ABU DHABI, Aug 13 (Reuters) - Abu Dhabi National Energy Co TAQA.AD (Taqa) said it remained committed to expansion in the high-cost North Sea oil and gas sector after a buying spree there drove up costs and hit second-quarter profits.

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

"The outlook is positive as higher oil prices imply better margins, with oil wells operating at more than breakeven point," said Rakesh Agarwal, analyst at Abu Dhabi Commercial Bank.

Taqa has expanded into North Sea and Canadian oil and gas output after starting out as an Abu Dhabi utility.

Oil majors have dumped North Sea assets due to their high cost and low margins, but some independents believe they can squeeze more out of remaining oil and gas reserves there.

"We're real believers in the North Sea," Chief Executive Peter Barker-Homek said in a conference call. "What you've seen in our results -- taking over complex assets and pulling together a workforce of 800 people over a very short period -- would naturally lead to some cost inefficiencies."

Taqa should see costs fall in the third and fourth quarters as it absorbs the new assets, Barker-Homek said.

Taqa has accumulated assets worth more than $2 billion in the North Sea and made acquisitions in Canada. The higher cost of sales linked to the acquisitions weighed on profits, Taqa said in a statement on Thursday.

The upstream expansion has also exposed Taqa to the impact of volatile commodity prices. Lower crude prices on the year contributed to a 71 percent slump in net profit in the quarter, Taqa said.

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