Petro-Canada expects 55 per cent production growth over five years

www.canada.com GILLIAN LIVINGSTON Canadian Press Wednesday, February 19, 2003

TORONTO (CP) - With more international assets, Petro-Canada expects oil and gas production to rise 55 per cent over the next five years as the company consolidates previous acquisitions and looks at further expansion, a senior company executive said Wednesday.

Current projects under development, "will result in excess of 600,000 barrels of oil equivalent a day for Petro-Canada by the end of 2007," Petro-Canada vice-president Gary Bruce told an analyst conference. "That's a 55 per cent increase over the next five years."

Last May, Calgary-based Petro-Canada completed its $3.2 billion takeover of most of the international assets of German-based Veba Oil and Gas, giving the Canadian company new assets in the North Sea, Africa and elsewhere.

That integration is now done and Petro-Canada is producing "well in excess of 200,000 barrels of oil equivalent a day from our international assets," said Bruce, vice-president of corporate communications and business development.

"These businesses provide us with a strong foundation and many opportunities for future growth," said Bruce,

Petro-Canada also said it sees big opportunities to expand its international operations in the wake of the Veba deal, which brought on people with expertise in international oil and gas production who can help the company take on new projects.

"We also are looking at other areas," he said. "So we do look at new areas if they fit with our capabilities and if they meet our investment criteria - and they are of significant size."

Looking ahead, Bruce said growth will come from Veba's assets in Syria, Libya, Trinidad, Venezuela, and the North Sea. In Canada, production growth is expected from Petro-Canada's Hibernia and Terra Nova oil projects off Newfoundland as well as the northern Alberta oilsands.

"Our strongest growth will come from East Coast oil, oilsands and international," Bruce said.

Petro-Canada (TSX:PCA) is one of Canada's largest energy companies, producing oil and natural gas as well as refining and selling gasoline and other fuels through a national chain of service stations.

In 2002, Petro-Canada's overall production averaged 382,400 barrels of oil equivalent a day, up from 196,500 barrels a day in 2001.

The company attributed that to the Veba acquisition and the higher production in its East Coast oil operations.

In 2003, overall production is expected to average 475,000 barrels of oil equivalent a day with the addition of production from offshore Newfoundland. That's up 24 per cent from 2002, Bruce said.

One asset Bruce said Petro-Canada will keep watch on is the Syncrude oilsands joint venture in Fort McMurray, Alta., in which the company already owns a 12 per cent stake.

Earlier this month, EnCana Corp. (TSX:ECA) of Calgary sold its 10 per cent stake in Syncrude to Canadian Oil Sands Ltd. for $1.07 billion in cash, making it the biggest shareholder of one of Canada's premier heavy oil projects.

The deal was done by the royalty trust that owns Canadian Oil Sands and gives it a 31.74 per cent stake in the project.

"We were a bit surprised that EnCana decided to sell - but I'm sure they have their reasons," Bruce said.

"It also is a bit difficult these days on the market to compete with these income trust companies, as you know they get a bit of a tax advantage over companies like ourselves," he noted, adding, "that wasn't really the case for us."

However, if any other partners in Syncrude want to sell off their stake, "we'd certainly look at it and we plan on being in Syncrude . . . for a long, long time," Bruce said, adding that Petro-Canada sees that "as a very long-term highly profitable investment."