Petro-Canada Increases Earnings by $27 Million

Petro-Canada reported fourth quarter operating earnings from continuing operations adjusted for unusual items of $513 million ($1.06/share), compared with $486 million ($0.98/share) in the fourth quarter of 2006. Fourth quarter 2007 cash flow from continuing operating activities before changes in non-cash working capital was $17 million ($0.04/share), compared with $991 million ($1.99/share) in the same quarter of last year. The significant decrease in cash flow from continuing operating activities before changes in non-cash working capital in the fourth quarter of 2007, compared with the same quarter in 2006, was due to the payment of $1,145 million after-tax ($2.36/share) to settle the Buzzard derivative contract hedges as announced December 12, 2007. Net earnings from continuing operations were $522 million ($1.08/share) in the fourth quarter of 2007, compared with $384 million ($0.77/share) in the same period of 2006. Net earnings included the change in the fair value of the Buzzard derivative contracts, and gains or losses on foreign currency translation and disposal of assets.

In 2007, operating earnings from continuing operations adjusted for unusual items was $2,528 million ($5.17/share), compared with $2,010 million ($3.99/share) in 2006. Cash flow from continuing operating activities before changes in non-cash working capital was $3,762 million ($7.69/share) in 2007, compared with $3,687 million ($7.32/share) for the previous year. Cash flow from continuing operating activities before changes in non-cash working capital for the full year in 2007 decreased due to the payment of $1,145 million after-tax ($2.34/share) to settle the Buzzard derivative contract hedges.

Net earnings from continuing operations for the full year in 2007 was $2,733 million ($5.59/share), compared with $1,588 million ($3.15/share) in 2006.

"The fourth quarter was a solid quarter, capping off an excellent year," said Ron Brenneman, president and chief executive officer. "We successfully followed through on our two business priorities; exceeding our upstream production targets and not only advancing five major projects, but adding two more. In 2008, we will bring on the Edmonton refinery conversion project - a significant contributor to future cash flows. We will also advance our six other growth projects, making final investment decisions on Fort Hills, the Syria Ebla gas and Montreal coker projects."

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