Petro-Canada, the third-largest oil
company in Canada, said first-quarter profit almost tripled as
the start-up of the Buzzard field in the North Sea boosted
production and stronger fuel demand widened refining margins.
Net income rose to C$590 million ($526 million), or C$1.18 a
share, from C$206 million, or 40 cents, a year earlier, the
Calgary-based company said in a statement today. Excluding one-
time items, the results beat the expectations of analysts.
Revenue rose 16 percent to C$4.84 billion.
Profit from refining more than doubled on stronger demand
for gasoline and other fuel, Petro-Canada said. Chief Executive
Officer Ron Brenneman predicted that the Buzzard field, the
largest offshore U.K. discovery in the past decade, will help
boost the company's production by 15 percent this year.
``It was a very good quarter,'' said Tom Ebbern, an analyst
at Tristone Capital Inc. in Calgary. ``In terms of beating the
numbers, it really was refining and marketing.''
Excluding one-time items such as asset sales and foreign
exchange gains, Petro-Canada said it earned C$1.17 a share. On
that basis, the company was expected to earn C$1.01, the average
of 12 analyst estimates compiled by Bloomberg.
Shares of Petro-Canada rose C$1.60, or 3.4 percent, to
C$48.60 at 11:35 a.m. on the Toronto Stock Exchange. A close at
that price would mark the biggest one-day gain since Jan. 23. The
stock, which has 11 buy ratings from analysts, eight holds and
two sells, has fallen 15 percent in the past year.
Imperial Refinery Fire
First-quarter refining profit soared to C$184 million from
C$75 million a year earlier. Stronger fuel demand and improved
margins contributed to the increase, the company said.
``This increase in petroleum product demand, which was about
3 percent quarter-over-quarter, was certainly at the high end of
anything that we've seen in the last couple of years,''
Brenneman, 60, told analysts and investors on a conference call.
``The strength of it has been a bit surprising.''
Refining margins were helped by the shutdown in February of
Imperial Oil Ltd.'s refinery in Nanticoke, Ontario, which
tightened gasoline supplies and boosted prices, he said.
Combined production of oil and natural gas rose 7.4 percent
to the equivalent of 405,000 barrels of oil a day with the start-
up of Buzzard. Petro-Canada also benefited from increased
production from fields off Canada's east coast and higher prices
for output from its MacKay River oil-sands project, said
Tristone's Ebbern, who rates Petro-Canada's shares at
``outperform'' and owns none.
Petro-Canada owns about 30 percent of Buzzard, located about
100 kilometers (62 miles) northeast of Aberdeen, Scotland. The
field may produce the equivalent of as much as 200,000 barrels of
oil a day later this year, lead partner Nexen Inc. predicted in
First-quarter oil production rose 14 percent to an average
of 280,400 barrels a day. The company said its oil sold for
C$63.46 a barrel, a drop of 2.1 percent from a year earlier.
Gas production fell 5 percent to 748 million cubic feet a
day. The fuel sold for C$7.32 per thousand cubic feet, a decline
of 16 percent from a year earlier.
Petro-Canada produces oil and natural gas in North America,
Africa and the U.K. It also owns refineries and a national chain
of filling stations in Canada.
Derivatives contracts used to lock in prices on about half
of Buzzard's output reduced first-quarter profit by C$60 million,
compared with costs of C$149 million a year earlier, Petro-Canada
said. The sale of fields in Syria increased profit by C$134
million in the first quarter of 2006, and a U.K. tax change cost
Imperial Oil Ltd., 70 percent owned by Irving, Texas-based
Exxon Mobil Corp., is Canada's largest oil company by 2006 sales,
followed by EnCana Corp.
(For a replay of Petro-Canada's conference call, go to the
company's Web site at -
To contact the reporters on this story:
Ian McKinnon in Calgary
Bill Murray in London at