Petro-Canada
NYSE : PCZ
TSX : PCA

Petro-Canada

December 14, 2006 16:00 ET

Petro-Canada's Production Expected to Increase in 2007; Capital Program Focused on Long-Life Assets

Highlights

  • Upstream production growing approximately 15% over 2006 levels
  • $4.1 billion capital program planned, up 15% over 2006
  • Capital expenditures focused on projects that provide long-term sustainable cash flow

CALGARY, ALBERTA--(CCNMatthews - Dec. 14, 2006) - Petro-Canada's Board of Directors approved a capital and exploration expenditure program totalling $4.1 billion for 2007, an increase of 15% compared with the program in 2006.

The 2007 capital program includes $2.6 billion directed to growth projects, exploration and new venture developments, a 37% increase in this category compared with 2006. Petro-Canada expects to invest $1 billion to replace reserves in core areas, $400 million to enhance existing assets and to improve profitability in the base business, and $100 million to comply with new regulations. The 2007 capital expenditure program is expected to be funded primarily from cash flow.

"Next year is an important year for us with a strong boost in upstream production growth," said Ron Brenneman, president and chief executive officer. "Our upstream production forecast for 2007 includes the full year impact of having big projects like White Rose and the Syncrude expansion on-stream, as well as the startup of Buzzard."

Petro-Canada's upstream production is expected to increase significantly in 2007 and be in the range of 390,000 barrels of oil equivalent per day (boe/d) to 420,000 boe/d. The planned growth in 2007 production is largely due to the ramp up of projects such as Buzzard, De Ruyter and L5b-C in the North Sea, the full year impact of production from the Syncrude Stage III expansion and the return of Terra Nova. Production for the full year of 2006 is expected to be at the low end of the range of 345,000 boe/d to 360,000 boe/d, in line with previous guidance.

"Our plans call for one large project coming on-stream in each of the next several years," said Brenneman. "Many of these are the type of long-life projects we've been deliberately adding to our portfolio during the last few years. So we're building a strong base of sustainable earnings and cash flow."

As the Company looks beyond 2007, annual capital programs are expected to be in the range of $4 billion to $5 billion for the next few years, reflecting investment in the next wave of profitable growth projects. Based on the Company's view of the business environment, it is anticipated that funding of the capital expenditure programs will be from cash flow and by using balance sheet strength. It is expected that debt levels and ratios will remain well within 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 Production Expected to Increase in 2007; Capital Program Focused on Long-Life Assets release at http://www.petro-canada.ca/en/investors/2453.aspx

Petro-Canada will hold a conference call to discuss the 2007 outlook with investors on Thursday, December 14, 2006 at 4:30 p.m. eastern time (EST). To participate, please call 1-866-898-9626 or 416-340-2216 at 4:25 p.m. Media are invited to listen to the call by dialing 1-866-540-8136 or 416-340-8010 and are invited to ask questions at the end of the call. Those who are unable to listen to the call live may listen to a recording of it approximately one hour after its completion by calling 1-800-408-3053 or 416-695-5800 (passcode number 3203311). A live webcast of the conference call will be available on Petro-Canada's website at http://www.petro-canada.ca/en/investors/2453.aspx on December 14 at 4:30 p.m. EST. Approximately one hour after the call, a recording will be available on Petro-Canada's website.

LEGAL NOTICE - FORWARD-LOOKING INFORMATION

This release contains forward-looking information. Such statements are generally identifiable by the terminology used, such as "plan," "anticipate," "forecast," "believe," "target," "intend," "expect," "estimate," "budget" or other similar wording suggesting future outcomes or statements regarding an outlook. Forward-looking information includes, but is not limited to, references to business strategies and goals, outlook (including operational updates and strategic milestones), future capital, exploration and other expenditures, future resource purchases and sales, construction and repair activities, refinery turnarounds, anticipated refining margins, future oil and gas production levels and the sources of growth thereof, project development and expansion schedules and results, future regulatory approvals, future results of exploration activities 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, contingent liabilities (including potential exposure to losses related to retail licensee agreements), and environmental matters. By its very nature, such forward-looking information requires Petro-Canada to make assumptions that may not materialize or that may not be accurate.

This forward-looking information is subject to known and unknown risks and uncertainties, and other factors which 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: imprecision of reserves estimates of recoverable quantities of oil, natural gas and liquids from resource plays and other sources not currently classified as reserves; general economic, market and business conditions; industry capacity; 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; the effects of weather and climate conditions; the results of exploration and development drilling and related activities; fluctuations in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including changes in taxes, royalty rates and resource utilization strategies; decisions or approvals of administrative tribunals; changes in environmental and other regulations; risks attendant with oil and gas operations, both domestic and international; international political events; expected rates of return; and other factors, many of which are beyond the control of Petro-Canada. More specifically, production may be affected by such factors as exploration success, startup timing and success, ramp up progress, facility reliability, planned and unplanned gas plant shutdowns, success of restarts following turnarounds, reservoir performance and natural decline rates, success of non-conventional resource plays, water handling and production from coal bed methane (CBM) wells, and drilling progress and results. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability, and seismic costs. These factors are discussed in greater detail in filings made by Petro-Canada with the Canadian provincial securities commissions and the United States (U.S.) Securities and Exchange Commission (SEC).

Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information contained in this release is made as of the date of this release and, except as required by applicable law, Petro-Canada does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this release is expressly qualified by this cautionary statement.

Petro-Canada's staff of qualified reserves evaluators generates the reserves estimates used by the Company. Petro-Canada's reserves staff and management are not considered independent of the Company for purposes of the Canadian provincial securities commissions. Petro-Canada has obtained an exemption from certain Canadian reserves disclosure requirements to permit it to make disclosure in accordance with SEC standards in order to provide comparability with U.S. and other international issuers. Therefore, Petro-Canada's reserves data and other oil and gas formal disclosure is made in accordance with U.S. disclosure requirements and practices and may differ from Canadian domestic standards and practices. Where the term barrel of oil equivalent (boe) is used in this release, it may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The use of terms such as "probable," "possible," "recoverable," or "potential" reserves and resources in this release does not meet the guidelines of the SEC for inclusion in documents filed with the SEC.

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