Calgary: Oil Biz Windfall : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread


Friday, January 19, 2001

Oil biz windfall Cash flows in for petroleum giants in face of economic downturn

By TODD NOGIER -- Calgary Sun

CALGARY -- Experts may be calling for a downturn in the economies of the U.S. and central Canada, but the petroleum industry has seemingly never been better.

Three major Canadian oil companies announced record earnings and cashflow yesterday, their bottom lines bolstered by the unprecedented combination of sky-high oil and natural gas commodity prices.

Calgary-based PanCanadian Petroleum, the cash-cow subsidiary of parent company Canadian Pacific Ltd., saw profits of more than $1 billion for the year ended Dec. 31, a record.

Oilsands giant Suncor Energy raked in $377 million in net earnings last year and posted a record $958 million in cash flow.

And Canada's largest petroleum company, Toronto-based Imperial Oil, also notched the highest annual profits in its storied 120-year history -- $1.42 billion -- almost triple what it earned in 1999.

"This is unprecedented, it's unbelievable. These companies are awash with cash," said Peter Linder of Research Capital Corp. in Calgary.

Energy producers are reaping the benefits of crude oil prices that hovered around $32 US per barrel in the fourth quarter and natural gas prices that nearly doubled to $8 per thousand cubic feet.

Oil companies are now frantically searching for ways to spend the windfall.

Two Calgary firms announced big takeover bids yesterday, both funded entirely from cash rather than stocks.

Alberta Energy Co.'s CEO Gwyn Morgan announced a $340-million takeover of Ballard Petroleum, a privately owned gas producer based in Billings, Mont.

Anderson Exploration, headed by J.C. Anderson, announced a friendly bid for cross-town rival Numac Energy Inc., for $960 million.

Most companies flush with cash have recently increased the amount they'll spend on oil and natural gas well exploration and drilling programs.

That will provide a boost for the Alberta economy as many of the drilling and service companies are based here.

And with much of the continent set for economic downturn, a strong petroleum sector bodes well for the province.

"This talk of us having moved away in our dependence on the oil and gas sector is a little bit spurious," said University of Calgary economist Robert McRae.

"A lot of industries still rely heavily on oil and gas activity for their daily business."

But, he warned, a marked slowdown in the U.S. will crimp demand for Canadian-produced oil and gas. "That will have some impact, but, I suspect, not a huge impact on Alberta's economy."

-- Rachel Gibson (, January 19, 2001


As a side note to the above, one of the oilfield equipment manufacturing companies here is moving to 24 x 7, 12-hour shifts, and is hiring 100 more workers in an attempt to keep up with the demand for its products not only locally but worldwide.

-- Rachel Gibson (, January 19, 2001.

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