PanCanadian Petroleum Ltd. announced “its most successful yearever” in 2000, with net income of $1.039 billion, or $4.09 pershare, and cash flow of $2.47 billion, or $9.78 per share. Thenumbers are substantially above 1999 net income of $350 million andcash flow of $1.11 billion (all Canadian dollars).

Natural gas production was up by 11% or 100 MMcf/d over 1999 atan average of 949 MMcf/d in 2000. Crude oil and natural gas liquidsproduction averaged 123,958 b/d compared to 114,620 b/d in 1999.

“Strong commodity prices, operational excellence and disciplinedstrategy execution have contributed to PanCanadian’s mostsuccessful year ever,” said David Tuer, CEO of the Calgary-basedcompany. Tuer credited a decision several years ago to focus moreon natural gas for the increase of gas operations to 60% of thecompany’s business, compared to 50% three years ago.

Fourth quarter cash flow was $844 million, or $3.32 per share,compared to $366 million, or $1.45 per share, for the same periodin 1999. The company reported net income of $344 million, or $1.35per share, compared to $147 million, or $0.58 per share, for thesame period in 1999.

Natural gas production averaged 1,041 MMcf/d in the fourthquarter of 2000, up 13% from 919 MMcf/d in the same period in 1999.Part of the increase reflected the contribution from the gasproducing assets acquired from Montana Power Oct. 31.

Consolidated capital expenditures totaled $1.4 billion. Thecompany drilled 2,479 wells in 2000 at a success rate of 94%, and2,067 of which were operated by PanCanadian. Proved reserveadditions for the Western Basin were 694 Bcf of natural gas and 40million barrels of crude oil and natural gas liquids, replacing159% of 2000 production. Western Basin finding and developmentcosts were $6.25 per barrel of oil equivalent in 2000 compared to$4.55 per boe in 1999.

PanCanadian plans to fund a $1.5 billion capitalspending programfor 2001 with cash flow from operations. Of the total spending, 40%will be directed to E&P, Tuer said in a teleconference earningsbriefing. While he is “very encouraged by the results of drillingso far” in the Deep Panuke prospect off the Atlantic Coast, Tuerdeclined to name a reserve figure. The company expects to completeits assessment and reveal plans for Deep Panuke in February. Thegas is “only marginally sour,” Tuer said, and there would be noproblem in removing the 0.2% of H2S “using conventionaltechnology.” Modeling timelines project getting production tomarket would most likely occur in the first quarter, 2005

Tuer said PanCanadian “fully expects it will have to curtailnatural gas and oil production due to higher power costs. Thecompany expects power costs, which include the power for pumps,production batteries, and compressors, and which have been rising,will go up from $40 million in 2000 to in excess of $100 million in2001.

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