CALGARY, Alberta (Reuters) - Petro-Canada PCA.TO, the country’s No. 4 oil producer and refiner, said on Tuesday that first-quarter profit jumped 82 percent, helped by surging oil prices and the settlement of a loss-making derivative contract late last year.
The company, known for operations in Canada, the North Sea and North Africa, earned C$1.08 billion ($1.07 billion), or C$2.22 a share, up from C$590 million, or C$1.19 a share, a year earlier.
Operating earnings, which exclude one-time gains and charges, rose to C$899 million, or C$1.86 a share, from C$580 million, or C$1.17 a share.
Analysts surveyed by Reuters Estimates had, on average, expected earnings per share of C$1.35.
“It was a decent quarter for them and the production result was good to see,” said Phil Skolnick, an analyst at Genuity Capital Markets.
The company produced an average 427,000 barrels of oil equivalent a day, up 5.4 percent from 405,000 barrels last year, and sold its oil for an average price of C$93.98 a barrel, up 48 percent from a year earlier.
“Operations were strong across the board,” Ron Brenneman, Petro-Canada’s chief executive, said on a conference call.
Brenneman said Petro-Canada has nearly wrapped up a C$2.2 billion project that will see its 125,000 barrel per day refinery at Edmonton, Alberta, retooled to process bitumen from the oil sands, cutting feedstock costs.
The conversion project will add an estimated $300 million a year to the company’s cash flow because of the lower costs, Brenneman said. However the company will cut production at the refinery for 60 days beginning in August to tie in the new equipment.
Petro-Canada is facing some delays at its planned $26 billion Fort Hills oil sands project. Brenneman said. The company won’t make a final decision on whether it will go ahead with the project until the fourth quarter of this year instead of the third quarter as it awaits regulatory clearances.
“This is a major decision for us and we want make sure we’ll have all the information we need,” Brenneman said.
He added, however, that Petro-Canada does expect to approve the project and sees the Fort Hills oil sands mine starting production in 2011. An upgrader, to convert the tar-like bitumen from the mine into synthetic crude, would be completed in 2012.
A C$1 billion plan to add a coker to its Montreal refinery, allowing it to process less expensive heavy oil, has been hampered by a lockout of unionized workers at the site.
Brenneman said the company was “a couple of months behind” on site preparation at the refinery because of the lockout, pushing the start-up date to 2010 from late 2009.
Cash flow, an indicator of the firm’s ability to pay for projects and drilling, was C$1.85 billion, or C$3.83 a share, in the first quarter, up from C$1.17 billion, or C$2.35 a share.
Petro-Canada said it also benefited from the fourth-quarter buyout of derivative contracts tied to production from its stake in the Buzzard oilfield in the North Sea. Those contracts lost C$60 million in the first quarter of 2007.
It also posted losses on foreign currency translation of long-term debt and lower gains on asset sales.
Reporting by Scott Haggett and Scott Anderson; Editing by Peter Galloway