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.

www.thetrucker.com

Unrelenting economic turmoil in oil-rich Venezuela and the question of war still looming large over oil-soaked Iraq continue to pump up the prices of on-highway diesel in the United States.

From Jan. 20-27 nationwide, diesel rose an average of 1.2 cents to $1.492 a gallon, which is 34.8 cents higher than the same time last year.

California again showed the week's biggest individual boost, 2.7 cents, pushing it to $1.598 a gallon, or 33.9 cents more than a year earlier. However, California couldn't claim the distinction of having the highest cost. That dubious honor went to the Central Atlantic region, where diesel went for $1.6 a gallon. That's a week's increase of 2.1 cents and 34.7 cents higher than the previous year.

On the East Coast, diesel was costing drivers 35 cents a gallon more than in 2002 after an increase of 1.6 cents propelled the price to $1.526.

The West Coast reported the week's fourth highest increase, 1.5 cents, to put the price there at $1.543, or 32.9 cents more than 12 months earlier.

The New England and Lower Atlantic regions reported identical weekly increases, 1.4 cents a gallon. Still, truckers in New England were paying $1.608, which was the second highest in the country. It was also 31.5 cents more than in 2002. The average price in the Lower Atlantic rose to $1.483, which was 35.5 cents higher than for the previous year.

The next highest jump for the week was 1.3 cents in the Midwest, where the average cost per gallon was $1.472, higher by 35.3 cents than for the same week in 2002. Gulf Coast drivers paid an average of $1.463 a gallon, a bump of only nine-tenths of a cent for the week. Still, the total cost there was, on average, 35.3 cents more than a year earlier.

Diesel was at its cheapest in the Rocky Mountain region, where it sold for $1.454. That's also a weekly increase of only nine-tenths of a cent, but still 33.2 cents higher than the previous year.

-- By Jerry Breeden Trucker Staff January 31, 2003

www.forbes.com Reuters, 01.31.03, 9:47 AM ET

(The following statement was released by the rating agency) NEW YORK, January 31, 2003: Fitch Ratings has placed the debt of Amerada Hess Corporation (Hess) on Rating Watch Negative. Fitch rates the company's senior unsecured debt and unsecured bank facility 'BBB' and the company's commercial paper 'F2'.

Yesterday, Hess announced a $530 million after tax impairment to the company's Ceiba Field in Equatorial Guinea (EG) due to higher development costs and a reduction in the probable reserves of the assets. The company also significantly decreased total production forecasts for 2003 to 360,000 barrels of oil equivalent per day (boepd). Total production for 2002 averaged 451,000 boepd.

Fitch has concerns with tightening free cash flow generation for Hess as a result of the lower production forecasts and sizable capital requirements going forward. The EG interests were some of the key assets in the $3.2 billion debt financed acquisition of Triton Energy completed in 2001. EG has been identified as a growth platform for Hess, however production from the Ceiba field for 2003 is expected to drop to 25,000 bpd. The lower total production forecast for Hess is also the result of planned divestitures in 2003 and a swap with BP of Hess's Colombian oil properties for BP's 25% interest in natural gas reserves in the joint development area (JDA) of Malaysia and Thailand. Hess is also seeing significant decline in gas production from the Gulf of Mexico as the assets acquired from LLOG in 2001 have been disappointing. In the third quarter of 2002, Hess recorded a $256 million after tax impairment of its Gulf of Mexico assets, representing a reduction of 29 million boe of proven reserves. The $750 million LLOG acquisition originally brought Hess 360 billion cubic feet of reserves (60 million boe).

Fitch also has concerns with Hess's ownership interest in the Hovensa refinery (rated 'BBB-' by Fitch on Rating Watch Negative). Hess is expected to maintain limited responsibility for the refinery following the financial completion of the new coker project. Hovensa faces significant capital expenditures to meet the low sulfur gasoline and diesel fuel regulations in 2004 and 2006 respectively, estimated at $440 million. While HOVENSA has some flexibility to defer the timing of the program without jeopardizing its ability to meet the implementation dates of the new standards, Fitch is concerned that a significant delay could hinder the refinery's ability to sell into the U.S. market.

Hess continues to benefit from strong commodity prices and will benefit from significant hedges in 2003 for both crude and natural gas. The company has also indicated that free cash flow will be used to reduce debt going forward. Hess had approximately $5.0 billion of debt outstanding at the end of 2002. The company maintains liquidity through a $1.5 billion 5-year committed bank facility (maturing in January 2006), commercial paper, cash flows and access to capital markets. Fitch will continue to evaluate the credit quality of Hess going forward and take rating action as warranted.

Amerada Hess is a large, independent oil and gas producer with operations focused in four core regions of the world - West Africa, the North Sea, the lower 48 states of the United States and Southeast Asia. Amerada Hess has historically been recognized as a mid-sized integrated oil company. With the sale of 50% of the St. Croix, Virgin Islands refinery to Petroleos de Venezuela, S.A. (PDVSA) in 1998, creating the Hovensa joint venture, Hess has steadily refocused the company on its upstream operations.

reuters.com Fri January 31, 2003 08:51 AM ET

HOUSTON (Reuters) - Anadarko Petroleum Corp. APC.N on Friday reported a better-than-expected rise in fourth-quarter earnings, helped by higher oil prices, but said profit in 2003 would be hurt by an ongoing oil industry strike in Venezuela.

Anadarko, the No. 1 U.S. independent oil and gas company, forecast first-quarter earnings of $1.15 a share, below Wall Street analysts' average estimate of $1.20, according to research firm Thomson First Call.

Besides the turmoil in Venezuela, first-quarter results will also suffer from a two-month shutdown of a Qatar oilfield for installation of new production facilities.

For 2003, the company expects to earn $3.90 a share. The First Call estimate is $3.99.

For the fourth quarter, Anadarko reported net income of $309 million, or $1.21 cents per share, compared with $108 million, or 41 cents a share, last year.

Last month, Anadarko raised its earnings guidance for 2002, citing increased volumes from U.S. onshore and Algeria made up for the impact of turmoil in Venezuela. At that time, the company forecast earnings per share of $1.05 for the fourth quarter.

Wall Street analysts had expected the company to report earnings of between 96 cents and $1.29 per share with an average view of $1.07 per share, according to First Call.

Shares of Anadarko closed at $45.25 Thursday on the New York Stock Exchange. The stock gained 7.5 percent during the quarter, slightly outperforming the 7.1 percent rise in the Dow Jones energy index .DJUSEN , of which it is a component.

biz.yahoo.com Press Release Source: ChevronTexaco Corp. Friday January 31, 9:02 am ET

-- Higher crude oil and natural gas prices boost upstream results but weaken downstream -- Exploration and production operating earnings of $1.2 billion up 125 percent from year-ago quarter -- Refining, marketing and transportation segment incurs an operating loss of $151 million -- Merger synergies on track toward annual savings target of $2.2 billion before-tax by end of first quarter -- Oil and gas reserves replacement for 2002 exceeds 100 percent for tenth consecutive year