Conoco Acquires Petro-Canada NGL Business; Purchase Increases North American NGL Production 65%; Reduces Cost 24%.

Business/Energy Editors

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HOUSTON--(BUSINESS WIRE)--March 2, 2000

Conoco Inc. (NYSE:COCA) (NYSE:COCB) and Conoco Canada Limited, a wholly owned subsidiary, have acquired substantially all of Petro-Canada's natural gas liquids (NGL) business. The purchase, which includes the fifth largest natural gas processing plant in North America, will be immediately accretive to earnings. Closing on the purchase of other Petro-Canada assets included in a definitive agreement signed today is scheduled to be completed in the second quarter of 2000. The price of the acquisition was not disclosed.

Conoco has acquired 92 percent operating interest in Petro-Canada's 2.4 billion cubic feet daily (bcfd) Empress natural gas processing plant near Medicine Hat, Alberta; the 580-mile Petroleum Transmission Company (PTC) pipeline, from Empress to Winnipeg; six related pipeline terminals; and a storage facility. The Empress plant has an NGL production capacity of 48,000 bpd.

"This acquisition is a large step in our program to economically upgrade our portfolio of North American natural gas processing and natural gas liquids assets, and follows the recently announced sale of midstream properties in Oklahoma and West Texas," said Rob McKee, Conoco's executive vice president for global exploration production. "The Petro-Canada acquisition augments our existing Canadian assets that were recently expanded through an acquisition of natural gas producing properties from Renaissance. This creates a solid base for Conoco's future growth in Western Canada, which is one of the fastest growing natural gas producing basins in North America. Both acquisitions fit our long-term strategy to better meet the growing North American demand for natural gas," McKee emphasized.

The Renaissance assets, purchased in late 1999, more than doubled Conoco Canada's natural gas reserves and increased daily natural gas production by 60 percent.

"The Petro-Canada acquisition greatly improves Conoco's position in the midstream industry," said Mike L. Johnson, vice president and general manager of Conoco's natural gas and gas products business unit. "This addition to our portfolio increases Conoco's total net natural gas liquid production in Canada, the U.S. and Trinidad by 65 percent, to 105 thousand barrels per day (mbpd), and triples net processing capacity to 3.4 bcfd, while reducing per barrel overhead and operating costs by 24 percent," he added.

Johnson said the Petro-Canada acquisition is Conoco's latest effort to move away from a midstream business of scattered assets in mature basins towards a more profitable business built on centralized, large-scale gas processing systems.

In addition to acquiring Petro-Canada assets, Conoco will operate and manage Petro-Canada's NGL wholesale supply and marketing operations, and employ about 140 of Petro-Canada's NGL-related employees in Calgary, the Empress plant, PTC pipeline system and field offices in Tulsa and Sarnia, Ontario.

The acquisition includes major agreements for Conoco to provide all NGL services for Petro-Canada's upstream operations in Western Canada and for Petro-Canada's refineries in Edmonton, Alberta; Oakville, Ontario; and Montreal, Quebec.

The agreement also includes Conoco's purchase of Petro-Canada's non-operating fractional interests in the Cochin Pipeline and its associated storage, treating plants and terminals; the Dow-operated Fort Saskatchewan propane-plus fractionator; and the Rimbey Pipeline. Those interests are subject to other companies' rights-of-first-refusal.

Headquartered in Calgary, Petro-Canada (TSE:PCA) (NYSE:PCZ) is one of Canada's largest oil and gas companies, operating in both the upstream and the downstream sectors of the industry.

Conoco, celebrating its 125th anniversary, is a major, integrated energy company active in more than 40 countries.

Editors Notes:

Conoco defines its "midstream" business as the processing, transportation and marketing of natural gas and natural gas liquids.

A map of the purchased properties is available at http://www.conoco.com/pa/00nr/Petro_canada.html.

This release contains forward-looking statements about Conoco's earnings, business plans, operations, production rates and reserves. These statements are not guarantees of future performance, involve certain risks, uncertainties, and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Actual outcomes and results may differ materially from what is expressed herein. Among the factors that could cause such differences are failure to obtain required regulatory approvals; failure to meet other closing conditions of the proposed transaction; changes in anticipated crude oil and natural gas prices; changes in anticipated product costs and margins; unexpected interruptions of the operation of the company's facilities; changes in estimated reserves; and unanticipated political events. Such matters are detailed in Conoco's publicly available filings with the Securities and Exchange Commission.