Petro-Canada’s quarterly profit jumped 42 per cent as oil prices surged but results were hampered by weak returns from sales of asphalt and heavy crude products, the country’s No 4 oil producer and refiner by stock market value said.
Petro-Canada, newly independent after Ottawa sold its 19 per cent interest in September, also said a longer-than-expected maintenance outage at the Terra Nova oil project off Newfoundland cut into the results.
However, the company still expects to meet its oil and gas production targets for the year.
“Our quarterly financial did not meet expectations. This was primarily due to events in the downstream business and in East Coast oil,” chief executive Ron Brenneman said.
Petro-Canada, known for operations in North America, south America, the North Sea and the Middle East, earned C$410 million ($339 million), or C$1.54 per share, up from year-earlier C$289 million, or C$1.09 cents per share.
came back and, frankly, surprised everybody a little bit,” FirstEnergy Capital Corp. analysts William Lacey said.
Asphalt and heavy fuel oil make up about 22 percent of the products from Petro-Canada’s refineries in Oakville, Ontario, and Montreal, Brenneman said.
Prices for those products did not keep pace with the surge in crude, which neared $50 a barrel by the end of September.
The conditions have carried over into the current quarter, but the impact on the company will lessen as it moves ahead with plans to shut down its aging Oakville refinery, he said.
In exploration and production, Petro-Canada pumped an average 435,700 barrels of oil equivalent per day in the third quarter, down from 449,000 a year earlier.
Increased output from the North Sea, Canada’s oil sands and U.S. Rockies gas after its acquisition of Prima Energy, was overshadowed by drops in Syrian oil, western Canadian gas and the Terra Nova turnaround, which has now ended, it said.
During the period, the company signed major deals for liquefied natural gas projects in Quebec, with TransCanada Corp. (TRP.TO), and in Russia, with Gazprom (GAZP.MO).
Brenneman said Petro-Canada could still embark on another project to import LNG into North America, possibly in the U.S. Gulf of Mexico. These developments are seen in the industry as one long-term answer to declining domestic gas production.
The company also said it bought back 4.3 million shares for C$278 million, bringing total purchases to date under its June normal course issuer bid to C$388 million.
($1=$1.21 Canadian).