Oil companies triple profits
www.theobserver.ca GLENN OGILVIE The Canadian Press and The Observer Friday, January 31, 2003 - 09:00
Chemical Valley at dusk on a cold winter's night. Three Chemical Valley giants were among Canadian oil companies that nearly tripled their fourth-quarter profits in 2002.
Higher oil, natural gas prices contributed to gains
Local News - Four of Canada's biggest integrated oil companies – including three with plants in the Chemical Valley – nearly tripled their fourth-quarter profits to $1.3 billion thanks to higher oil and gas prices, but analysts say there won't likely 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 US a barrel by year end.
Higher prices for oil and natural gas helped make 2002 a stellar year for the industry leaders.
But Gord Currie, an analyst with Canaccord Capital, said it's "unlikely" that 2003 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 financial results released so far by four of Canada's biggest oil producers, refiners and gasoline marketers show they're reaping the benefits of those higher prices while they have that option.
Shell Canada's earnings report Thursday rose to $247 million in the fourth quarter from $170 million a year ago. However, full-year profits fell to $561 million from just over $1 billion a year ago, a period of extraordinarily high natural gas prices.
Last week, Suncor Energy reported that fourth-quarter profits soared nearly tenfold to $258 million from $26 million. For 2002, profits of $761 million were nearly double the year earlier.
Crude oil prices in the fourth quarter were a major reason for Imperial's 2002 performance, coupled with higher profits on petroleum products like those made in Sarnia. Net earnings from petroleum products were $128 million in the fourth quarter, compared to $75 million for the same quarter in 2001.
For the full year, the company earned a profit of $1.2 billion compared with $1.24 billion in 2001.
Last year started with reasonable oil prices but then U.S. President George Bush identified Iraq as a possible target and "oil prices started a long gradual climb to $30 US and then, with a little help from Venezuela, pushed right through the $30 US level," Currie said.
The Venezuelan strike continues but production from the world's fifth-largest oil producer has recently gained ground, though it's still below the three million barrels per day it pumped prior to the start of the strike on Dec. 2.