IN THE NEWS / Petro-Canada To Spend Nearly $1.1 Billion Next Year
Canadian Press
Petro-Canada will spend nearly $1.1 billion to find and produce oil and gas in 1999, down only modestly from this year despite plunging world oil prices.
The big Calgary energy company said Monday its board had approved a plan to spend $1.075 billion next year, about five per cent below its 1998 spending. The oil giant said it will finance its 1999 spending through internal cash flows and money raised from the sale of non-core assets.
"The capital plan reflects our confidence in Petro-Canada's growth potential and the long-term outlook for our industry," company president Jim Stanford said in a release. "We will manage our finances conservatively in the current low-commodity-price environment, but we have the financial strength to continue a strong program of investment in our best growth opportunities in order to build shareholder value."
Many of the world's oil companies have been drastically cutting capital spending for next year to conserve cash while oil prices hover at their lowest levels since the mid-1980s
Oil prices have dropped about 40 per cent this year and plunged to fresh 12-year lows Monday following U.S. President Bill Clinton's decision to end air strikes on Iraq.
Benchmark Brent crude oil futures dropped 37 cents to $9.61 US in London.
Petro-Canada said its spending next year will focus on its East Coast operations, particularly Terra Nova, Hibernia and other Grand Banks properties, as well as its share of the Syncrude heavy oil project in northern Alberta.
Although the company will spend less on its refining and marketing business next year, it expects its gasoline station network and refineries to contribute strongly to overall financial performance because of past efficiency-improving investments.
In breaking down its capital plans, Petro-Canada said it will:
**Spend $400 million on the Grand Banks, off the east coast of Newfoundland. With Hibernia now producing crude, investment will focus on developing the Terra Nova field where commercial production is expected to begin late in the year 2000. Another $85 million will be used to finance Petro-Canada's share of exploration drilling at Hebron, another promising field off Newfoundland.
**Cut spending in Western Canada to $260 million from $355 million forecast for this year. About $100 million will be spent on exploration and the rest on development, with a strong focus on natural gas. Petro-Canada will also spend $95 million in the Syncrude oil sands mining operation and other nearby heavy-oil projects.
**Cut capital spending in refining and marketing to about $220 million -- belowlast year -- including about $50 million to clean up pollution.
Petro-Canada shares fell 10 cents to $16.75 on the Toronto stock market Monday.
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