Energy companies gushing - Petro-Canada and Shell join stream of firms with huge increases in profits
www.canoe.ca, January 31, 2003 By TODD NOGIER, BUSINESS EDITOR
Two more of Canada's largest oil companies reported massive increases in profits, boosted by sky-high oil and gas prices at the end of 2002.
Petro-Canada said yesterday its fourth- quarter earnings soared 440% over the same quarter last year to $356 million while Shell Canada's profits jumped 45% to $247 million.
They are the latest oil firms to enjoy the bonanza in the oilpatch which has seen the country's four largest integrated companies -- which produce, refine then sell petroleum products -- rake in a total of $1.3 billion in profits in the final three months of 2002.
The fourth quarter capped off what Petro-Canada's CEO Ron Brenneman called "a water-shed" year for the Calgary-based company, which earned $974 million last year.
"We were really firing on all cylinders," Brenneman told analysts after releasing the sterling quarterly report.
Shell Canada also saw a big rise in profits on the quarter and on the year earnings hit $561 million.
"Good operational performance, following an extensive second-quarter maintenance schedule, allowed us to benefit from improved commodity prices and refining margins in the second half," said CEO Tim Faithfull.
The industry is riding a wave of strong oil prices which have jumped more than 30% in the last three months on fears world supplies could plummet due to the combination of an workers' strike in Venezuela and war in the Middle East.
Canadian natural gas prices surged more than 60% at the end of 2002 as cold weather in key regions of the U.S. sent demand skyrocketing.
Husky Energy, the only remaining major integrated in the country yet to divulge its fourth- quarter earnings picture, is set to report Feb. 6.
While the fourth-quarter gusher may look good on the balance sheet, most experts predict lower prices ahead after the Iraqi and Venezuelan situations subside.
"Whenever oil and gas prices are as high as they are today, the balance of probabilities is that they're going to be lower," said Gord Currie, an analyst with Canaccord Capital.
"I think it's just a question of time -- is it the second quarter or a year from now, we don't know. But it would be very difficult for 2003 to measure up."
But in the case of Petro-Canada and Shell, both can look forward to a big year.
Petro-Canada is enjoying a strong production increase from Veba Oil & Gas, which it purchased last year for $3.2 billion, good performance at its East Coast operations and improving retail sales.
Shell will reap the 155,000 barrel-a-day production from its marquee Athabasca oilsands project which started operations in December and will hit its peak later this year.
PETRO-CANADA
- Fourth quarter 2002 profit: $356 million.
- Fourth quarter 2001 profit: $66 million. ESSO
- Fourth quarter 2002 profit: $454 million.
- Fourth quarter 2001 profit: $194 million. SHELL
- Fourth quarter 2002 profit: $247 million.
- Fourth quarter 2001 profit: $170 million. SUNCOR
- Fourth quarter 2002 profit: $258 million.
- Fourth quarter 2001 profit: $26 million. HUSKY
- Fourth quarter 2002 profit:TBA Feb. 6.
- Fourth quarter 2001 profit: $49 million.