www.morningstar.ca 30 Jan 03(6:10 PM) |  E-mail Article to a Friend

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Petro-Canada, the country's No. 3 oil producer, refiner and marketer, said on Thursday its fourth-quarter profit quintupled on high oil and gas prices and a hefty production jump after buying international assets.

Petro-Canada's <PCA.TO> better than expected showing was also fueled by strong results at its refineries, as industry-wide profit margins improved.

The company, which more than doubled output last year by acquiring the widespread assets of Veba Oil & Gas, earned C$356 million ($230 million), or C$1.34 a share, in the quarter, up from C$66 million, or 25 Canadian cents a share, a year earlier

That handily beat an average estimate of C$1.02 a share among analysts polled by Thomson First Call.

Cash flow, which gives a glimpse into an oil company's ability to fund projects, was C$807 million, or C$3.06 a share, up from C$307 million, or C$1.17 a share in the fourth quarter of 2001. Revenue rose to C$3 billion from C$1.8 billion.

For the year, profit rose 15 percent to C$974 million, or C$3.71 a share, from C$846 million, or C$3.19 a share.

"We of course got a big boost from commodity prices, but more fundamentally it was a year of successful execution across the board," chief executive Ron Brenneman said.

The stock rose 78 Canadian cents to C$50.52 in Toronto, just shy of its record high of C$50.80 set last week. It is up 9 percent since the start of the fourth quarter, beating the Toronto Stock Exchange's energy group, which slipped slightly.

Petro-Canada is known for its national gas station chain, western natural gas and oil sands developments, and offshore oil projects on the country's East Coast.

Last year it bought Veba for C$3.2 billion, giving it exploration and production projects in the North Sea, North Africa, the Middle East and South America.

Canada's integrated oil firms are awash in cash due to sky-high commodity prices.

Fears of war with Iraq and the protracted strike in major oil exporter Venezuela drove crude prices up 38 percent, while cold weather and dwindling inventories pushed Canadian natural gas prices up 67 percent in the quarter.

Petro-Canada has the top percentage gain in fourth-quarter profit among its peers.

"Price is a big component of that and, of course, the acquisition of Veba was a big component of that," said Gord Currie, analyst with Canaccord Capital Corp.

"But their (refining and marketing arm) has also been performing extremely well. Not only did they get some help from refining margins, but their refineries are running flat out and making darn near their cost of capital."

The exploration and production division earned C$343 million, up from C$52 million in the fourth quarter of 2001. With the Veba takeover and last year's startup of the Terra Nova oil project off Newfoundland, production more than doubled to 472,400 barrels of oil equivalent a day.

Refining and marketing earnings were C$78 million, up from C$48 million, partly due to improved refining margins, or the difference between the cost of crude and the wholesale price of petroleum products like gasoline wholesale, Petro-Canada said.

Brenneman, who has warned oil sands plans could be shelved over cost uncertainty created the Kyoto climate change accord, said he was heartened by Ottawa's recent measures to limit the industry's exposure. Canada ratified the treaty on cutting greenhouse gas emissions late last year.

However, Petro-Canada needed more clarification before embarking on its next oil sands expansion phase, he said.

The company is nearing a decision on going ahead with its 80,000 barrel a day Meadow Creek, Alberta, project and a refurbishment of its Edmonton refinery to process the supply. Meadow Creek could start production in 2007.

Ottawa's deal with the industry provides protection against emission-cutting costs for current operations, Brenneman said.

"What we're looking for from the federal government is ... a framework of principles that would govern the fiscal terms around these longer-term, larger projects," he said.

($1=$1.53 Canadian)

reuters.com Thu January 30, 2003 03:18 PM ET

NEW YORK (Reuters) - World oil prices headed higher on Thursday as the United States signaled that its diplomatic efforts to persuade Iraq to disarm were unlikely to last much longer.

U.S. light crude CLc1 closed 22 cents higher at $33.85 a barrel, building on Wednesday's surge of nearly a dollar which was fueled by the twin worries of Iraq and falling U.S. oil stocks.

International benchmark Brent crude stood 22 cents higher at $31.24.

Prices pushed higher after the White House said the final diplomatic push to force Iraq, the world's eighth biggest oil exporter, to disarm would last weeks not months.

"The president is using this window now to engage in very busy and active diplomacy. This will take place in a period of weeks not months," White House spokesman Ari Fleischer said.

Energy traders said the comments had confirmed the market's conviction that war was imminent.

"There is not a single oil trader who believes that an attack on Iraq will not happen soon," said Nauman Barakat, trader at FIMAT Banque.

"These latest U.S. comments confirm it's not a question of if but when, and that it will be sooner rather than later."

HIGH PRICES HIT STOCKS, ECONOMY

The threat of war in the Middle East, which supplies 40 percent of world crude exports, has pushed up prices by 35 percent since November, raising concerns over the impact of high energy costs on the world economy.

The effect of war fears has been compounded by a 60-day oil strike in Venezuela, which normally supplies over 13 percent of U.S. oil imports, which has deepened worries over oil supplies.

U.S. government data showed on Wednesday that a two-week freeze across the eastern United States had lopped about 8 percent off the country's heating oil stocks last week.

The effect has been felt dramatically in crude oil prices, which are rising despite oil cartel OPEC's January decision to add 1.5 million barrels per day to global supplies. OPEC President Abdullah al-Attiyah said the group was now helpless.

"We are all concerned that high prices will hurt the consumer and ultimately world economic growth. But there is nothing OPEC can do about it," he said. "OPEC has no magic wand to solve the political problems and stop the rise in price."

Venezuela's two-month old strike appeared to falter as the government said production was now up to 1.4 million barrels per day (bpd), recovering steadily from lows of 150,000 bpd in December.

Striking oil workers said the output was only just over one million bpd, barely a third of pre-strike production.

asia.reuters.com Thu January 30, 2003 02:19 PM ET By Carolyn Koo

NEW YORK (Reuters) - Exxon Mobil Corp.XOM.N on Thursday said quarterly profit rose by more than 50 percent as sharply higher oil and gas prices helped fuel better-than-expected results.

The hike in energy prices also lifted profit at independent oil and gas producer Apache Corp.APA.N , while a large charge erased the benefit of stronger commodity prices at Amerada Hess Corp.AHC.N , which posted a quarterly loss.

Exxon Mobil, the world's No. 1 publicly traded oil company, saw benchmark oil prices rise by more than 40 percent from a year earlier amid fears of a potential war in Iraq and as a labor strike hit Venezuela, one of the largest crude exporters in the world.

Net income jumped 53 percent to $4.09 billion, or 60 cents a share, in the fourth quarter from $2.68 billion, or 39 cents a share, a year earlier.

EXXON MOBIL TOPS ESTIMATES

Excluding special items, the Irving, Texas company reported earnings per share of 56 cents, beating the Thomson First Call consensus estimate by 6 cents.

Revenue jumped 18 percent in the fourth quarter to $56.21 billion, although revenue for the year dropped 4 percent to $204.51 billion.

Shares of Exxon Mobil, a component of the Dow Jones industrial average, were up fractionally to $33.83 Thursday, after rising almost 10 percent during the fourth quarter.

While the rally in oil prices lifted Exxon Mobil's exploration and production division's profit by 73 percent to $3 billion, it took a toll on the refining and marketing and chemicals businesses, which use crude as a key raw material.

"It was pretty clearly a strong quarter, though I don't think it's indicative of a company firing on all cylinders," said Tyler Dann, an analyst at Banc of America Securities who rates the company a "neutral" and does not own any shares.

"I think chemicals could clearly do better and even the downstream, you could argue, might do better down the road."

REFINERS STRUGGLED

Downstream, or refining and marketing, earnings fell 19 percent to $821 million, reflecting weaker industrywide conditions.

Refiners struggled through last year as high inventories of products such as jet fuel and gasoline hurt profit margins. Companies such as Exxon Mobil, which not only produce oil, but refine it into products such as gasoline to be sold at retail stations, are banking on a turnaround this year.

Banc of America's Dann believes the refining and marketing business may improve in 2003.

"We think that this company's leverage to that is significant, especially outside the United States," he said. "It just so happens that they have a more balanced asset portfolio between exploration and production, downstream and chemicals."

The chemicals business posted a 64 percent drop in earnings to $76 million, on worldwide margins that fell because of higher costs for oil, gas and other raw materials.

PRODUCTION FLAT

Oil and gas production for the quarter was flat versus a year ago, as the contribution from new projects was wiped out by natural field declines and OPEC quota restrictions.

Houston-based Apache's quarterly profit more than doubled from a year-ago to $179.4 million, or $1.24 a share. Amerada Hess, based in New York, reported a loss of $371 million, or $4.20 a share, reversing a prior-year profit, because of the write-down of a key oilfield in Equatorial Guinea.

Shares of Apache were up 11 cents to $60.85 and shares of Amerada Hess dropped $6.36. or more than 11 percent, to $49.92.

allafrica.com Onyebuchi Ezigbo Abuja

Chairman, House of Representatives Committee on Petroleum Matters, Hon. John Agoda, has called on the Federal Government to use the additional oil revenue expected from this year's budget to fund developmental projects in the country.

The current price of crude oil hovers around $32 per barrel, about $10 above the $22 pprojected in the 2003 budget. Nigeria Competition Bill

The rise in crude oil prices is the result of the threat of war in the Gulf Region and the oil price workers' strike in Venezuela.

The price of oil has continued to soar despite Organisation of Petroleum Exporting Countries (OPEC) recent increase of quota.

Speaking with THISDAY yesterday in Abuja, Agoda said there were a number of development projects earmarked for execution by the Federal Government, which if effectively carried out, will positively impact on the lives of the generality of Nigerians.

He listed such priority areas as education, employment-generating projects, and the general elections etc.

"We have various development projects going on in the country, starting from the economy, the educational sector and with the general elections coming up this year, we need re-education and adequate enlightenment of our people and we need to create more employment", Agoda stressed.

Last year, Nigeria's development aspirations suffered severe setback due to the disruptive effects of the fluctuation of oil revenue profile.

www.msnbc.com

NEW YORK, Jan. 30 — Exxon Mobil Corp. on Thursday said quarterly profit rose by more than 50 percent, as sharply higher oil and gas prices helped fuel better-than-expected results.

	       EXXON MOBIL, THE WORLD’S No. 1 publicly-traded oil company, saw benchmark oil prices rise by more than 40 percent from the previous year’s quarter alongside fears of a potential war in Iraq and a labor strike in Venezuela, one of the largest crude exporters in the world.

       The company’s fourth-quarter net income rose to $4.09 billion, or 60 cents a share, as a result, jumping 53 percent from the $2.68 billion, or 39 cents a share, it reported for the year-ago quarter.        Excluding special items, the Irving, Texas company reported earnings per share of 56 cents, or 6 cents higher than the Thomson First Call consensus estimate. Revenue jumped 18 percent to $56.21 billion.        Shares of Exxon Mobil, a component of the Dow Jones industrial average, were up 1.7 percent Thursday morning, after rising almost 10 percent during the fourth quarter.        But while the rally in oil prices lifted its exploration and production division’s profit by 73 percent to $3 billion, it took a toll on the company’s refining and marketing and chemicals businesses, which use crude as a key raw material.

Playing now: • GDP grows at 0.7% rate • AOL loses nearly $100 billion • Dow, Exxon, Gillette, Boeing report earnings       “It was pretty clearly a strong quarter, though I don’t think it’s indicative of a company firing on all cylinders,” said Tyler Dann, an analyst at Banc of America Securities who rates the company a “neutral” and doesn’t own any shares.        “I think chemicals could clearly do better and even the downstream, you could argue, might do better down the road.”        Downstream, or refining and marketing, earnings fell 19 percent to $821 million, reflecting weaker industrywide conditions.        Refiners struggled through last year as high inventories of products such as jet fuel and gasoline hurt profit margins. Companies such as Exxon Mobil, which not only produce oil, but refine it into products such as gasoline to be sold at retail stations, are banking on a turnaround this year.        Banc of America’s Dann is one of the industry-watchers that believes the refining and marketing business may improve in 2003.        “We think that this company’s leverage to that is significant, especially outside the United States,” he said. “It just so happens that they have a more balanced asset portfolio between exploration and production, downstream and chemicals.”        The chemicals business posted a 64 percent drop in earnings to $76 million, on worldwide margins that fell because of higher costs for oil, gas and other raw materials.