Petro-Canada profit jumps

Thu Jan 31, 2008 11:40am EST
 
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Petro-Canada's fourth-quarter profit climbed 36 percent on higher crude production and surging prices, the country's No. 4 oil producer and refiner said on Thursday.

Petro-Canada Chief Executive Ron Brenneman also said the company's refining and marketing operations could emerge mostly unscathed as the Canadian economy cools.

Canada will still show some economic expansion, even if the United States slips into recession, and growth in demand for petroleum products could be in the 1 percent to 2 percent range, down from the recent 2 percent to 3 percent, Brenneman said.

"I don't think it will have a significant impact on our downstream results," he said during a conference call.

In the quarter, net earnings in Petro-Canada's downstream, or refining and marketing, business -- known for its national chain of red and white gas stations -- fell only slightly to C$81 million ($81 million).

That part of the industry is already being pressured in the United States by the slowdown in the economy and that has shown up in weaker profit margins at refineries.

Eastern Canada is more influenced by U.S. conditions than the West, FirstEnergy Capital Corp analyst William Lacey said. Petro-Canada has refineries in Montreal and in Edmonton, Alberta.

"The profitability of the refineries in Alberta has always been differentiated versus the Eastern Canadian refineries, and that's really driven by the fact that there is no imported product out here," the Calgary-based analyst said.   Continued...

 
<p>A man pumps gas into his truck at a Petro-Canada gas station in Toronto January 31, 2008. Petro-Canada's fourth-quarter profit climbed 36 percent on higher crude production and surging prices, the country's No. 4 oil producer and refiner said on Thursday. REUTERS/Mark Blinch</p>