December 13, 2007 17:08 ET

Petro-Canada's Capital Program Up 28% Over 2007; Continued Focus on Long-Life Projects

CALGARY, ALBERTA--(Marketwire - Dec. 13, 2007) -


  • $5.3 billion capital program planned: focus on long-life projects that provide sustainable cash flow
  • Upstream production guidance range for 2008 of 390,000 barrels of oil equivalent per day (boe/d) to 420,000 boe/d

Petro-Canada's Board of Directors today approved a capital and exploration expenditure program totalling $5.3 billion for 2008, an increase of 28% compared with the program in 2007.

The 2008 capital program includes $3.6 billion directed to growth projects, exploration and new venture developments, a 50% increase in this category compared with 2007. In addition, Petro-Canada expects to invest $1.2 billion to replace reserves in core areas, $430 million to enhance existing assets and to improve profitability in the base business, and $105 million to comply with new regulations. The 2008 capital expenditure program is expected to be funded primarily from cash flow and additional debt as required.

"The step up in our capital program for 2008 begins to fund the next large projects in our portfolio of opportunities," said Ron Brenneman, president and chief executive officer. "These are high quality, long-life projects consistent with our business strategy to deliver profitable growth."

Petro-Canada's upstream production is expected to decrease slightly in 2008 and be in the range of 390,000 boe/d to 420,000 boe/d. In 2008, natural declines in East Coast Canada and Western Canada are expected to be partially offset by additional volumes from the full-year impact of Buzzard and Saxon in the North Sea, as well as higher planned Oil Sands production. Production for the full year of 2007 is expected to be at the high end of the range of 400,000 boe/d to 420,000 boe/d, in line with previous guidance.

"In 2007, we took our base rate of production to a new level, and we will see that again when our next big upstream projects come on," said Brenneman. "In the meantime, our two refining conversion projects will boost earnings and cash flow significantly in the near term."

The increased level of capital spending contemplated is consistent with the Company's priority of investing in attractive projects to create shareholder value. As the Company looks beyond 2008, spending on the next large projects will likely result in annual capital expenditures exceeding operating cash flow. Additional funding requirements are expected to be met by external financing. As financial leverage is expected to increase over time, it will be managed in the context of Petro-Canada's target ranges.

Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and downstream sectors of the industry in Canada and internationally. The Company creates value by responsibly developing energy resources and providing world class petroleum products and services. Petro-Canada is proud to be a National Partner to the Vancouver 2010 Olympic and Paralympic Winter Games. Petro-Canada's common shares trade on the Toronto Stock Exchange (TSX) under the symbol PCA and on the New York Stock Exchange (NYSE) under the symbol PCZ.

Read the full text of "Petro-Canada's Capital Program Up 28% Over 2007; Continued Focus on Long-Life Projects" release at

Petro-Canada will hold a conference call to discuss the 2008 outlook with investors on Thursday, December 13, 2007 at 5:30 p.m. Eastern Standard Time (EST). To participate, please call 1-866-898-9626 (toll-free in North America), 00-800-8989-6323 (toll-free internationally), or 416-340-2216 at 5:25 p.m. Media are invited to listen to the call by dialing 1-866-540-8136 (toll-free in North America) or 416-340-8010. Media are invited to ask questions at the end of the call. A live audio webcast of the conference call will be available on Petro-Canada's website at on December 13, 2007 at 5:30 p.m. EST. Those who are unable to listen to the call live may listen to a recording of the call approximately one hour after its completion by calling 1-800-408-3053 (toll-free in North America) or 416-695-5800 (passcode number 3242534#). Approximately one hour after the call, a recording will be available on Petro-Canada's website.


This release contains forward-looking information. You can usually identify this information by such words as "plan," "anticipate," "forecast," "believe," "target," "intend," "expect," "estimate," "budget," or other similar wording suggesting future outcomes or statements about an outlook. Below are examples of references to forward-looking information:

  • business strategies and goals
  • future investment decisions
  • outlook (including operational updates and strategic milestones)
  • future capital, exploration and other expenditures
  • future resource purchases and sales
  • construction and repair activities
  • turnarounds at refineries and other facilities
  • anticipated refining margins
  • future oil and gas production levels and the sources of their growth
  • project development, and expansion schedules and results
  • future exploration activities and results, and dates by which certain areas may be developed or may come on-stream
  • retail throughputs
  • pre-production and operating costs
  • reserves and resources estimates
  • royalties and taxes payable
  • production life-of-field estimates
  • natural gas export capacity
  • future financing and capital activities (including purchases of Petro-Canada common shares under the Company's normal course issuer bid (NCIB) program)
  • contingent liabilities (including potential exposure to losses related to retail licensee agreements)
  • environmental matters
  • future regulatory approvals

Such forward-looking information is subject to known and unknown risks and uncertainties. Other factors may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such factors include, but are not limited to:

  • industry capacity
  • imprecise reserves estimates of recoverable quantities of oil, natural gas and liquids from resource plays, and other sources not currently classified as reserves
  • the effects of weather and climate conditions
  • the results of exploration and development drilling, and related activities
  • the ability of suppliers to meet commitments
  • decisions or approvals from administrative tribunals
  • risks attendant with domestic and international oil and gas operations
  • expected rates of return
  • general economic, market and business conditions
  • competitive action by other companies
  • fluctuations in oil and gas prices
  • refining and marketing margins
  • the ability to produce and transport crude oil and natural gas to markets
  • fluctuations in interest rates and foreign currency exchange rates
  • actions by governmental authorities (including changes in taxes, royalty rates and resource-use strategies)
  • changes in environmental and other regulations
  • international political events
  • nature and scope of actions by stakeholders and/or the general public

Many of these and other similar factors are beyond the control of Petro-Canada. Petro-Canada discusses these factors in greater detail in filings with the Canadian provincial securities commissions and the United States (U.S.) Securities and Exchange Commission (SEC).

We caution readers that this list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information in this release is made as of December 13, 2007 and, except as required by applicable law, Petro-Canada does not update it publicly or revise it. This cautionary statement expressly qualifies the forward-looking information in this release.

Petro-Canada disclosure of reserves

Petro-Canada's qualified reserves evaluators prepare the reserves estimates the Company uses. The Canadian provincial securities commissions do not consider our reserves staff and management as independent of the Company. Petro-Canada has obtained an exemption from certain Canadian reserves disclosure requirements that allow the Company to make disclosure in accordance with SEC standards. This exemption allows comparisons with U.S. and other international issuers.

As a result, Petro-Canada formally discloses its reserves data and other oil and gas data using U.S. requirements and practices, and these may differ from Canadian domestic standards and practices. Note that when we use the term boe in this release, it may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (Mcf) to one barrel (bbl) is based on an energy equivalency conversion method. This method primarily applies at the burner tip and does not represent a value equivalency at the wellhead.

To disclose reserves in SEC filings, oil and gas companies must prove they are economically and legally producible under existing economic and operating conditions. Proof comes from actual production or conclusive formation tests. The use of terms such as "probable," "possible," "recoverable," or "potential reserves and resources" in this release does not meet the SEC guidelines for SEC filings.

The table below describes the industry definitions that we currently use:

Definitions Petro-Canada uses       Reference
Proved oil and gas reserves         U.S. SEC reserves definition (Accounting
 (includes both proved developed     Rules Regulation S-X 210.4-10, U.S.
 and proved undeveloped)             Financial Accounting Standards Board
                                     Statement No.-69)
Unproved reserves, probable and     CIM (Petroleum Society) definitions
 possible reserves                   (Canadian Oil and Gas Evaluation
                                     Handbook, Vol. 1 Section 5)
Contingent and prospective          Society of Petroleum Engineers, World
 resources                           Petroleum Congress and American
                                     Association of Petroleum Geologists
                                     definitions (approved February 2000)

There is no certainty that it will be economically viable or technically feasible to produce any portion of the resources. For use in this release, "total resources" means reserves plus resources.

SEC regulations do not define proved reserves from our oil sands mining operations as an oil and gas activity. These reserves are classified as a mining activity and are estimated in accordance with SEC Industry Guide 7. For internal management purposes, Petro-Canada views these reserves and their development as part of the Company's total exploration and production operations.

Throughout this release, total Company reserves, total Company production, total Company reserves replacement and total Company reserves life index (RLI) on a before royalty basis are calculated using the sum of all oil and gas activities, and all oil sands mining activities. Before royalties, oil sands mining 2006 year-end proved reserves were 345 million barrels (MMbbls) and oil sands mining annual 2006 production was 11 MMbbls.

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