Petro-Canada Reports Profits Down, Keeps Strong Liquidity

Petro-Canada announced today first quarter operating earnings of $111 million ($0.23/share), down 88% from $899 million ($1.86/share) in the first quarter of 2008. First quarter 2009 cash flow from operating activities before changes in non-cash working capital was $702 million ($1.45/share), down 62% from $1,852 million ($3.83/share) in the same quarter of last year. Net losses were $47 million ($(0.10)/share) in the first quarter of 2009, compared with net earnings of $1,076 million ($2.22/share) in the same quarter of 2008.

"A key priority for us during these tough times is to maximize cash flow in order to preserve our strong liquidity," said Ron Brenneman, president and chief executive officer. "Reliable business operations, prudent financial oversight and our cash flow generation capability are helping us weather the downturn."Our East Coast Canada, International and Downstream business units all contributed reasonable cash flow even with lower commodity prices and cracking margins," added Brenneman. "This, combined with a reduction in our 2009 capital program below what we indicated in December, enabled us to maintain strong liquidity through a difficult first quarter business environment."

Operating Highlights

First quarter production in 2009 averaged 410,000 boe/d net to Petro-Canada, down from 427,000 boe/d net in the same quarter of 2008. Volumes reflected decreased North American Natural Gas, East Coast Canada and International production, partially offset by increased Oil Sands production.

Operational Updates

  • Syncrude to complete planned turnaround of Coker 8-3 in the second quarter of 2009.
  • Hibernia delayed its planned 21-day turnaround until the second quarter of 2009.
  • Terra Nova is planning a nine-day turnaround in the second quarter of 2009 to do regular emergency systems testing and a 21-day turnaround in the third quarter of 2009 to complete the planned regulatory and maintenance scope.
  • White Rose is planning a 28-day regulatory and maintenance turnaround in the third quarter of 2009, followed by a further period of reduced production, lasting approximately 40 days, to do subsea work associated with the tie-in of the North Amethyst project.
  • Buzzard is planning a 28-day turnaround in the third quarter of 2009 to do regulatory work and to complete tie-ins for the enhancement project. Production will be reduced for a further 14 days during the third quarter due to maintenance work on the Forties pipeline system.

Major Project Milestones

  • The Edmonton RCP continued to ramp up production in the first quarter of 2009.
  • Development drilling, procurement and fabrication of the North Amethyst portion of the White Rose Extensions project continues and is on schedule to deliver first oil in late 2009 or early 2010. Work on development concepts for West White Rose continues to advance.
  • The Syria Ebla gas project is on plan and was 60% complete at the end of the first quarter of 2009. Three wells have been drilled, one of which has been handed over to the engineering, procurement and construction contractor for tie-in. First gas is expected in mid-2010.
  • Following the signing of the new Libya EPSAs, work has commenced with a focus on preparing the Amal field development program and initiating the new exploration program. Seismic operations continued in the first quarter of 2009, with approximately 25% of the program completed at the end of the first quarter.
  • To preserve the Company's strong liquidity position, the three unsanctioned growth projects (Montreal coker, MacKay River expansion and Fort Hills mining project) are on hold until commodity prices and financial markets stabilize and the proposed merger with Suncor is completed. The Company is reworking these projects' costs to take advantage of the current market environment.
  • The Fort Hills Energy Limited Partnership reached an agreement with the Government of Alberta on extending the term of the Fort Hills oil sands leases until 2019. Regulatory approvals for both the amendment to the Fort Hills approved mine plan and approval for the Sturgeon Upgrader have been received. The upgrader portion of the project is on hold.

Exploration Update

In the first quarter of 2009, Petro-Canada and its partners finished operations on five wells of the up to 12 wells planned in 2009. One well was completed as a gas discovery (L6-7 in the Netherlands sector of the North Sea). This well was started in 2008 but was completed in the first quarter of 2009. One well was completed as an oil discovery (Hobby in the United Kingdom (U.K.) sector of the North Sea). As a result of the discovery, three sidetracks are planned from this wellbore, of which one has been completed so far. The three wells drilled in Alaska (Chandler 1, Wolf Creek 4 and Gubik 4) all encountered natural gas. Drilling operations were completed for the Wolf Creek and Gubik wells so they were plugged and abandoned. The Chandler well was suspended for possible future testing. These wells are part of a multi-season program and the results are being evaluated for incorporation into an overall plan to determine the commerciality of natural gas development in the region.