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Canadian Oil Companies Rack Up Billions In Profits

Higher Crude Prices, Better Efficiencies Given Credit

CALGARY, Updated 3:03 p.m. EST January 25, 2001 -- The news will likely not sit well with Canadians who are forking out more cash these days to fill up their cars and heat their homes.

Consumer loss is business gain as Canada's best-known oil companies struck a gusher last year -- high crude oil and natural gas prices helped them more than double profits to $3.55 billion.

The industry giants -- Imperial Oil, Shell Canada, Petro-Canada and Suncor Energy -- racked up $3.55 billion in profits for the year, compared with $1.92 billion in 1999.

Shell Canada was the last of the big companies - which produce oil, refine it and sell gasoline through a gas station network - to report year-end results Wednesday. The Calgary-based company earned profits of $858 million, or $3.04 a share, for 2000, up from net earnings of $641 million or $2.22 a share in 1999.

"While market conditions were an important factor in our results, a strong focus by our employees on operational excellence allowed us to take maximum advantage of exceptional prices and margins," said Tim Faithful, president and chief executive of Shell Canada.

"These results provide a solid foundation for our large growth investment program over the next five years."

The Calgary company is 78 per cent owned by the European energy giant Royal Dutch-Shell group.

Shell Canada's results Wednesday mirrored those of its main competitors -- Petro-Canada, Imperial and Suncor Energy.

Petro-Canada reported Tuesday it earned $893 million for 2000, more than tripling the company's 1999 earnings of $233 million.

Among other Canadian integrated energy companies, Toronto-based Imperial reported annual profits of $1.42 billion, up from $510 million. Imperial is a subsidiary of U.S. oil giant Exxon Mobil Corp., and sells gasoline through its Esso station network across Canada.

Calgary's Suncor Energy Inc., a major oilsands energy producer which sells gasoline through the Sunoco banner in Ontario, saw its 2000 profits more than double to $377 million from $186 million.

The newest integrated Canadian oil company -- Husky Energy -- has not yet reported yearend results, while industry giant PanCanadian Petrolem Ltd., a Calgary-based oil and gas producer owned by the Canadian Pacific Ltd. conglomerate, earned profits of $894 million, nearly triple its 1999's earnings.

Oil industry analyst Wilf Gobert said rising natural gas prices in the fourth quarter -- the beginning of the winter heating season -- helped boost profits at all major energy companies.

"The third quarter was a record in the oilpatch for earnings and cash flow," he said in an television interview. "The fourth quarter so far has had only four or five companies report. But so far the fourth quarter is a new record and a new peak beating the third quarter. That's obviously not surprising given what happened to natural gas prices and the fact world oil prices were higher in the fourth quarter."

At Shell Canada, fourth quarter profits were $296 million or $1.08 per share, up from $358 million or $1.24 a share for the same 1999 period. A huge chunk of the 1999 fourth-quarter earnings included special gains from sales of assets.

Cash flow from operations was $1.25 billion, up from $795 million in the year-ago period.

Expenses, meanwhile rose to $1.15 billion from $715 million, as the company spent heavily to develop its $4 billion project in the Athabasca oil sands in northern Alberta. The project is slated for completion late next year.

-- Rachel Gibson (, January 30, 2001

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