Petro-Canada
CALGARY – Petro-Canada will be adding debt to help finance its expansion plans in Canada and abroad after increasing its profit in 2007 by 72 per cent to $2.7 billion.
The integrated oil and gas producer and marketer has seven major projects on the go, and "while a large part of our growth will be funded by cash flow from our businesses, we expect cash flow to be less than our capital requirements," chief financial officer Harry Roberts told an investor conference call Thursday.
"Our balance sheet is very strong, so we have the capacity to take on additional debt in the future," Roberts said, promising that management will be "financially disciplined."
Share buybacks (TSX: PCA) are likely to be scaled back or suspended, he added, "however, we do plan to keep dividends competitive."
Petro-Canada’s $2.73 billion in full-year net income from continuing operations was worth $5.59 per share, up from $1.59 billion, $3.15 per share, in 2006.
The company more than replaced its production with proved and probable reserves, CEO Ron Brenneman said, while annual production rose 21 per cent thanks to reliability gains, "particularly at Terra Nova, which had a much improved year."
Fourth-quarter earnings were $522 million, $1.08 per share, up 36 per cent from $384 million, 77 cents per share, a year earlier.
The October-December bottom line was boosted by higher operating earnings and gains on currency translation of debt, partly offset by a $120-million charge to close out hedges on production from Buzzard in the North Sea.
Quarterly operating profit adjusted for unusual items was $513 million or $1.06 per share, well short of the Thomson Financial analyst consensus of $1.32 per share.
Petro-Canada stock was down about two per cent on the TSX at midmorning, losing 96 cents to $46.09, with a 52-week high and low of $61.50 and $41.00.
"It’s taken us a few years to grow and confirm our strategy of building a balanced exploration program, but our patience is paying off," Brenneman said.
"Buzzard came on stream successfully and we saw full-year production from Syncrude stage 3 (in the Alberta oilsands) and White Rose (east of Newfoundland)," he said.
"In addition, as promised, U.S faxless online payday advances. Rockies (natural gas) production ramped up to 100 million cubic feet per day."
However, the North American natural gas business unit recorded a $97-million writedown of coalbed methane assets in the American Rockies "due to probable reserves reductions, combined with lower prices."
Brenneman said that despite an apparent looming recession in the United States, "Canada’s in a pretty strong position from an economic point of view."
He said growth in domestic oil and gas consumption, which has been running at up to three per cent in the past several years, may slow slightly but this "won’t have a significant impact on our downstream results."
In Petro-Canada’s major Canadian projects, the conversion of its Edmonton refinery to process oilsands crude is on track for startup late this year , an agreement has been reached on extending White Rose, a Montreal coker investment decision is expected in the second quarter, and front-end engineering work continues on the Fort Hills oilsands development and MacKay River expansion.
Outside Canada, developments are underway in Syria and Libya, while natural gas exploration is ongoing in Alaska as well as the Northwest Territories.
Filed under: marketing by Specialist