Petro-Canada said it fell to a loss in the first quarter of 2009 due to mark-to-market valuations and foreign currency losses on the company's long-term debt.
The company has reported a loss of $47-million, or 10 cents per share, for the quarter ended March 31. This marks a sharp reversal from profit of $1.08-billion, or $2.22 per share recorded during the same quarter the year before.
Petro-Canada's quarterly operating
earnings fell 88 per cent to $111-million from last year's levels of $899-million.
Petro-Canada claims a $99-million foreign currency translation of its long-term debt denominated in U.S. dollars was responsible.
In the first quarter of 2008, the company gained $68-million compared to first quarter of 2009's loss of
$25-million loss on mark-to-market valuations of its stock-based compensation.
Petro-Canada attributed the decrease in operating earnings to lower commodity prices, coupled with curtailed upstream production volume.
As well, the global economic downturn has weakened the oil and gas market, with prices plummeting nearly $100 (U.S.) since reaching record highs of more than $147 a barrel last July.
Petro-Canada said upstream production was in line with expectations for the quarter at 410,000 barrels of oil equivalent per day and said production will likely increase considerably after the completion of a $19-billion merger with Suncor Energy Inc. [SU-T] That deal, slated to close later this year, is still subject to shareholder and regulatory approval.
“A key priority for us during these tough times is to maximize cash flow in order to preserve our strong liquidity,” chief executive Ron Brenneman said in a statement. “Reliable business operations, prudent financial oversight and our cash flow generation capability are helping us weather the downturn.
Petro-Canada
is trimming its 2009 capital spending budget by $600-million to $3.4-billion. The company's Montreal coker development, MacKay River expansion and Fort Hills mining project are on hold until the situation improves.
