2002 a bonanza for oil giants

www.canada.com GILLIAN LIVINGSTON CP Friday, January 31, 2003

Iraqi, Venezuelan crises boost prices. Big 4 nearly triple fourth-quarter profits, but a repeat this year seems unlikely   Four of Canada's biggest integrated oil companies nearly tripled their fourth-quarter profits to $1.3 billion thanks to higher oil and gas prices, but analysts say there probably won't be a repeat performance in 2003.

For Imperial Oil, Petro-Canada, Shell Canada and Suncor Energy, the fourth quarter in particular and 2002 overall was a bonanza as the threat of a U.S. war with Iraq and a major strike in Venezuela pushed oil prices above $30 U.S. a barrel by year end.

Higher prices for oil and natural gas helped make 2002 a stellar year for the industry leaders, which also benefited from increased production from new projects or acquisitions and improved profits in gasoline refining and marketing to make it a stellar year for the industry.

But Gord Currie, an analyst with Canaccord Capital, said it's "unlikely" that '03 will be as strong as 2002 for Canada's big oil companies because prices are likely to dip as the Iraq situation is resolved.

"Whenever oil and gas prices are as high as they are today the balance of probabilities is that they're going to be lower," he said. "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."

The results disclosed so far by four of Canada's biggest oil producers, refiners and gasoline marketers show they are reaping the benefits of higher prices while they have that option.

EnCana Corp., created last year by the merger of PanCanadian Energy and Alberta Energy Corp. to create the largest Canadian independent oil and gas producer, isn't due to release its fourth-quarter results until Feb. 20. But Petro-Canada issued vastly improved results yesterday when it reported a 440-per-cent increase in its fourth-quarter earnings - to $356 million from $66 million a year ago.

Higher energy prices were the main cause, although Petro-Canada also gained from its acquisition last year of the international assets of Veba Oil & Gas, whose production and exploration is focused in the North Sea, North Africa and northern Latin America.

Petro-Canada chief executive Ron Brenneman called 2002 "an outstanding year" which annual profits rose by 15 per cent over 2001 to $974 million.

Shell Canada's earnings report yesterday echoed these events as its profits rose to $247 million in the fourth quarter from $170 million a year ago. Full-year profits, fell, however, to $561 million from just over $1 billion a year ago, a period of extraordinarily high natural-gas prices.

Last week, Calgary-based Suncor Energy reported fourth-quarter profits soared more than tenfold to $258 million from $26 million. For the year, profits of $761 million were nearly double the year earlier.

Energy giant Imperial Oil more than doubled its profits to $454 million in the fourth quarter as high oil prices helped the company post its third-biggest annual profit ever.

For the full year, the Toronto-based company, a subsidiary of U.S.-based ExxonMobil, earned a profit of $1.2 billion compared with $1.24 billion in 2001.

Gushing Cash

Imperial Oil Ltd.

Quarterly profits: $454 million, up from $194 million in the year-earlier period.

Company: Imperial operates national chain of 2,500 Esso gasoline stations, a number of oil refineries and is produces heavy oil and natural gas.

Shell Canada Ltd.

Quarterly profits: $247 million, up from $170 million.

Company: Major gas producer. Owns national chain of Shell stations.

Petro-Canada Inc.

Quarterly profits: $356 million, up from $60 million last year.

Company: A major oil and gas producer, it also operates national gas-station chain.

Suncor Energy Inc.

Quarterly profits: $258 million, up from $26 million last year.

Company: A major oilsands producer in northern Alberta. It also has a chain of Sunoco gasoline stations in Ontario.