Petro-Canada: Diversified Portfolio Continues to Deliver Strong Q1 Results

Petro-Canada announced first quarter operating earnings of $899 million ($1.86/share), compared with $580 million ($1.17/share) in the first quarter of 2007. First quarter 2008 cash flow from operating activities before changes in non-cash working capital was $1,852 million ($3.83/share), compared with $1,166 million ($2.35/share) in the same quarter of last year.

Net earnings were $1,076 million ($2.22/share) in the first quarter of 2008, compared with $590 million ($1.19/share) in the same period of 2007.

"We're off to a good start for the year, with excellent first quarter earnings," said Ron Brenneman, president and chief executive officer. "For the remainder of the year, we remain focused on our 2008 priorities - to deliver production within our guidance range through strong, safe and reliable operations, and to advance growth through our seven major projects."

Operating earnings increased to $899 million ($1.86/share) in the first quarter of 2008, compared with $580 million ($1.17/share) in the first quarter of 2007. Results reflected the positive impact of higher realized upstream prices ($353 million), increased upstream production(1) ($71 million), lower other expenses(2) ($23 million), and lower DD&A and exploration expenses ($7 million). The results were partially offset by lower Downstream margins(3) ($(87) million) and higher operating, general and administrative (G&A) expenses ($(48) million).

Operating earnings on a segmented basis increased 55% to $899 million in the first quarter of 2008, compared with $580 million in the first quarter of 2007. The increase in first quarter operating earnings reflected higher International ($272 million), East Coast Canada ($88 million), Oil Sands ($67 million), and North American Natural Gas ($24 million) operating earnings. The results were partially offset by lower Downstream operating earnings ($(125) million) and higher Shared Services costs ($(7) million).

Net earnings in the first quarter of 2008 were $1,076 million ($2.22/share), compared with $590 million ($1.19/share) during the same period in 2007. Net earnings in the first quarter of 2008 were higher than in the first quarter of 2007 due to higher operating earnings combined with the benefit associated with settling the Buzzard derivative contracts in the fourth quarter of 2007, partially offset by losses on foreign currency translation of long-term debt and lower gains on asset sales.

During the first quarter of 2008, cash flow from operating activities before changes in non-cash working capital was $1,852 million ($3.83/share), up from $1,166 million ($2.35/share) in the same quarter of 2007. The increase in cash flow from operating activities before changes in non-cash working capital reflected higher operating earnings.

Operating Highlights

First quarter production averaged 427,000 boe/d net to Petro-Canada in 2008, up from 405,000 boe/d net in the same quarter of 2007. Higher volumes reflected increased International production, partially offset by lower East Coast Canada and Oil Sands production and declining production in the North American Natural Gas business.