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COST REDUCTIONS CONTRIBUTE TO IMPROVED EARNINGS FOR PETRO-CANADA

COST REDUCTIONS CONTRIBUTE TO IMPROVED EARNINGS FOR PETRO-CANADA
 CALGARY, Alberta, July 30 /PRNewswire/ -- Petro-Canada today announced sharply improved operating earnings and net earnings for the first half of 1992, compared to the same period in 1991. A $141 million reduction in ongoing operating and overhead costs was key to the improvement.
 Petro-Canada's earnings from operations for the first six months of 1992 were $80 million on revenues of $2.3 billion. Earnings included gains on asset sales of $23 million. Second quarter operating earnings were $48 million, including gains on asset sales of $1 million.
 After a previously announced provision related to restructuring and reorganization and a loss on retirement of long-term debt, the company's net earnings for the first six months of 1992 were $38 million, or 18 cents per share, while the net earnings for the second quarter were $6 million, or 3 cents per share.
 Cash flow from operations in the first six months of 1992 was $244 million, or $1.13 per share. Second quarter cash flow amounted to $120 million, or 55 cents per share.
 Petro-Canada takes a conservative approach in providing for complex income tax matters and routinely reviews its provisions. The company has re-evaluated and reduced its cumulative provision for outstanding income taxes and related interest, taking into account recent policy interpretations by the taxation authorities and other matters. Included in net earnings for the second quarter is $40 million arising from the reduction of this provision. The remaining provision for income taxes and related interest covers all outstanding income tax matters on a conservative basis.
 Effective Jan. 1, 1992, Petro-Canada changed to the last in, first out ("LIFO") from the first in, first out ("FIFO") method of accounting for crude oil and product inventories. The change had the effect of increasing net earnings for the first six months of 1992 by $6 million and cash flow from operations by $10 million. The second quarter effect of this change was to decrease net earnings by $20 million and cash flow from operations by $35 million.
 The 1992 results compared with a net loss in the first six months of 1991 on the FIFO method of $149 million on revenues of $2.5 billion. There was a net loss of $97 million in the second quarter of 1991. Cash flow from operations was $101 million during the first six months of 1991 and $39 million in the second quarter.
 Chairman and Chief Executive Officer W.H. Hopper commented: "Petro-Canada's improved results demonstrate the significant progress our people have made in cutting costs. Ongoing operating and overhead costs are down by nearly 15 percent over the first half of 1991. By year's end, I expect overall cost savings to reach $225 million."
 Resources division earnings in the first six months of 1992 were $89 million, up from $1 million in the first six months of 1991. The division's 1992 results include gains on asset sales of $22 million, compared with a loss of $5 million in the first six months of 1991. In addition to the reductions in ongoing costs, the 1992 results include a $21 million income tax adjustment and a $34 million before- tax reduction in operating costs arising from the sale of the company's interest in the Wolf Lake project. This reduction resulted from reversing provisions established in prior years for anticipated expenses which are no longer required. The benefit of lower operating costs was partially offset by lower production volumes and lower commodity prices.
 Products division earnings were $9 million in the first half of 1992, including $1 million in gains on asset sales. The division's operating loss in the first six months of 1991 was $122 million on a FIFO basis. An $89 million reduction in operating and overhead expenses was a major contributor to the turnaround in earnings. However, product margins remained under pressure.
 Corporate and other net expenses in the first six months of 1992, before the provision related to restructuring and reorganization and the loss on the retirement of long-term debt, were $18 million, compared to $14 million in the first six months of 1991. While 1992 results benefited from lower interest expenses and a $19 million adjustment for income tax and related interest, 1991 results included a reduced deferral of profit on inter-segment purchases in inventory.
 First half expenditures on property, plant and equipment and exploration were $179 million, down 40 percent from the first six months of 1991. Total 1992 expenditures on property, plant and equipment and exploration are anticipated to be approximately $500 million, in keeping with the company's strategy of holding expenditures to levels consistent with expected cash flow and proceeds from disposals.
 The board of of directors has declared a quarterly dividend of 3.25 cents per share payable on Oct. 1, 1992, to shareholders of record on Sept. 3, 1992.
 PETRO-CANADA
 Selected Financial Data
 (unaudited, millions of dollars)
 Second Quarter First Half
 1992 1991 1992 1991
 Net Earnings (Loss)
 Resources 61 (13) 89 1
 Products
 - from operations (5) (56) 9 (122)
 - restructure and
 reorganization - - - (14)
 (5) (56) 9 (136)
 Corporate and Other
 - from operations (8) (28) (18) (14)
 - restructure and
 reorganization (39) - (39) -
 - loss on retirement of
 long-term debt (3) - (3) -
 (50) (28) (60) (14)
 6 (97) 38 (149)
 Cash Flow From Operations
 Resources 96 73 170 181
 Products 32 (13) 102 (66)
 Corporate and Other (8) (21) (28) (14)
 120 39 244 101
 Expenditures on Property
 Plant and Equipment and
 Exploration
 Resources 63 67 148 172
 Products 16 69 26 118
 Corporate and other 3 5 5 9
 82 141 179 299
 PETRO-CANADA
 Consolidated Balance Sheet
 (unaudited, millions of dollars)
 June 30, Dec. 31,
 1992 1991
 Assets
 Current assets 1,184 1,330
 Investments 461 453
 Property, plant and
 equipment, net 3,888 4,084
 Other assets 203 167
 5,736 6,034
 Liabilities and Shareholders'
 Equity
 Current liabilities
 Outstanding cheques less cash
 and short-term deposits 15 12
 Short-term notes payable 216 118
 Accounts payable and accrued
 liabilities 845 857
 1,076 987
 Long-term debt 1,327 1,531
 Deferred credits 398 459
 Deferred income taxes 493 564
 Shareholders' equity 2,442 2,493
 5,736 6,034
 Change in Accounting Policy
 Effective Jan. 1, 1992, the company changed from the first in, first out ("FIFO") method to the last in, first out ("LIFO") method of accounting for crude oil and product inventories. The cumulative effects of this change on prior years' results are reflected in the 1992 balance sheet, but individual prior periods have not been restated because the effects on such individual periods are not reasonably determinable. The effect of the change on net earnings and cash flow from operations for the six months ended June 30, 1992, was to increase earnings by $6 million, or 3 cents per share, and to increase cash flow from operations by $10 million, or 5 cents per share. The effect of the change on net earnings and cash flow from operations for the three months ended June 30, 1992, was to decrease earnings by $20 million or 9 cents per share, and to decrease cash flow from operations by $35 million, or 16 cents per share.
 Selected Operating Data
 Second Quarter First Half
 1992 1991 1992 1991
 Crude oil and field natural
 gas liquids production, net
 before royalties (thousands
 of barrels per day) 77.3 90.0 82.3 92.3
 Natural gas liquids from
 straddle plants including
 ethane (thousands of
 barrels per day) 35.2 32.7 38.4 38.0
 Natural gas production,
 net before royalties
 (millions of cubic feet
 per day) 475 492 507 559
 Petroleum product sales
 (thousands of cubic metres
 per day) 42.6 41.4 41.6 40.6
 Crude oil processed
 (thousands of cubic metres
 per day) 38.9 35.2 40.2 38.3
 -0- 7/30/92 R
 /CONTACT: Judy Wish (media), 403-296-5850, or Paul Cox (investors), 403-296-4000, both of Petro-Canada/
 (PCA.) CO: Petro-Canada ST: Alberta IN: OIL SU: ERN


AL -- LA022 -- 5176 07/30/92 14:26 EDT
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Date:Jul 30, 1992
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