Petro-Canada Acquires Long-Life Gas Assets in Syria

Petro-Canada said Wednesday that it has completed an agreement with a wholly-owned subsidiary of Marathon Oil Corporation to purchase a 90% interest in Marathon's production sharing contract (PSC) in the Ash Shaer and Cherrife natural gas fields in central Syria for $54 million Cdn ($46 million US).

Under this agreement, Petro-Canada will act as operator and will have the option to purchase the remaining 10% interest from Marathon within five years subject only to approval by the Government. Transfer of the 90% interest in the 25-year PSC to Petro-Canada has been approved by the Syrian Government. According to the terms of the PSC, Petro-Canada is obligated to develop and produce an estimated 80 million cubic feet per day of natural gas from the Ash Shaer and Cherrife fields, with first gas expected to be delivered in 2010.

Life-of-field production from Ash Shaer and Cherrife is currently estimated at approximately 500 billion cubic feet of natural gas equivalent (83 million barrels of oil equivalent MMboe) over the term of the 25-year contract. Appraisal work is expected to identify upside, which could double the initial life-of-field estimate. This could lead to an expansion of production capacity after initial start-up. Capital investment for the project is expected to range from around $550 to $800 million Cdn ($460 to $660 million US), depending on the life-of-field production.

"We are building a portfolio of exploration and development opportunities in a country where there is significant remaining potential," said Peter Kallos, Executive Vice-President of Petro-Canada's International business unit. "Our strategic objective in Syria is to establish a long-life, platform asset base that will provide material earnings and cash flow to the Company. This contract, together with its upside potential and our exploration license in Block II, are important steps in delivering on that strategy."

Wednesday's announcement reinforces Petro-Canada's continued pursuit of new growth internationally. With operations currently focused in three core geographic areas: Northwest Europe; North Africa/Near East; and Northern Latin America, Petro-Canada continues to explore new opportunities in these regions in order to develop further the Company's long-life portfolio and build on Petro- Canada's operating strengths.

Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and the downstream sectors of the industry in Canada and internationally. The Company creates value by responsibly developing energy resources and providing world class petroleum products and services.


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