Petro-Canada Doubles Upstream Production

Petro-Canada reports second quarter net earnings of $321 million ($1.22 per share). This included a net gain of $45 million ($0.17 per share) relating to foreign currency translation. These results compare with net earnings of $399 million ($1.50 per share) in the second quarter of 2001, which included a foreign currency translation gain on the long-term debt of $65 million ($0.24 per share) and a positive adjustment of $55 million ($0.21 per share) related to provincial tax rate changes. Cash flow in the second quarter was $540 million ($2.06 per share), up from $454 million ($1.71 per share) in the same period last year.

"Petro-Canada has delivered exceptional upstream growth," said Chief Executive Officer Ron Brenneman. "Production in the quarter is double last year's level, largely due to the acquisition of Veba's oil and gas operations and the impact of Terra Nova. We are very pleased that the Veba transaction closed as planned. The new international team led by President Norm McIntyre in London is in place and the integration of our international operations is largely complete."

Consolidated six month net earnings were $409 million ($1.56 per share), compared with $681 million ($2.55 per share) in the first six months of 2001. For the first half of the year, cash flow of $827 million ($3.15 per share) was down from $1 083 million ($4.05 per share) in the first half of last year.

Upstream Canada earnings from operations in the second quarter were $174 million, down from $230 million in the same period last year. Earnings in the quarter were impacted by lower natural gas and oil prices, but benefited from increased production at Terra Nova and Hibernia. Upstream International earnings from 60 days of operations in the quarter were $58 million, reflecting the newly acquired international assets of Veba Oil and Gas.

Downstream earnings from operations in the second quarter were $73 million compared with $111 million in the second quarter of 2001. Excellent refinery reliability and improved marketing margins were more than offset by weaker refining margins and a narrower light/heavy differential.

"Our operations performed well in the second quarter", continued Brenneman. "East Coast oil produced solid growth. And our profitability focus is delivering results, evident by the strong performances of the Downstream and Western Canada gas."

Petro-Canada converts gas to oil equivalent at a rate of 6,000 cubic feet of gas to one barrel of oil. Petro-Canada's daily production of crude oil, field natural gas liquids and natural gas averaged 375 000 barrels of oil equivalent per day in the second quarter of 2002, compared with 188 400 barrels of oil equivalent per day in 2001. The increase reflected volumes from the acquisition of most of the Veba Oil & Gas assets, effective May 2, 2002, and the start-up of Terra Nova in late January 2002. Production from the acquired international oil and gas operations averaged 200 400 barrels of oil equivalent per day net to Petro-Canada for 60 days in the quarter.

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