Calgary-based Petro-Canada, which already is one of the largest oil refiners in Canada, plans to move toward the western part of the country and into Alaska as it establishes a broader base for its natural gas growth. CFO Harry Roberts told analysts at the Merrill Lynch Global Energy Conference Wednesday that the company has “excellent” prospects for its upstream business.

Petro-Canada has long focused on three core areas for its upstream market: Western Canada, with acreage in the Mackenzie Delta; Scotian shelf off the East Coast, where it holds acreage in the White Rose and Hebron/Ben Nevis projects; and in oil sands, where it is considered a leader in developing commercial in situ projects. However, the company, which has been rumored to be on a short list for a possible takeover, is now looking beyond its current work to begin prospecting in new regions.

“We’re actually looking beyond the western Canada basin for growth opportunities in the North American natural gas market,” Roberts said. “Last winter, we drilled the first well drilled in the Mackenzie Delta in over a decade. We have a five-year multi-well program there with our partner Devon Energy Corp.”

Beyond the delta, however, Roberts said Petro-Canada plans to drill a “prospect on the Scotian Shelf next year and possibly expand on our initial position in Alaska.”

Noting that the company had grown its total reserves by almost 60% in the past two years, Roberts said that it now is set to take off by divesting of properties it no longer wants and looking for new opportunities. “Petro-Canada has superb upstream growth potential for the coming decade,” he said.

Capital expenditures this year are forecast to be close to $1.8 billion, and upstream expenditures “reflect higher spending in Western Canada, on in-situ oil sands” and in a Libyan acquisition. Going forward, “we are looking at a fairly aggressive capital program to fund our growth opportunities. Next year, we have MacKay River spending peaking (and) we could be starting on White Rose.” Along with that, the company is “looking at an exciting exploration program…two rigs in the Mackenzie Delta and possibly drilling off the East Coast.”

Petro-Canada also might make some acquisitions in the coming year, he suggested. “We are always on the look out to add to that organic growth — and asset acquisitions can certainly play a part.” Noting that Petro-Canada “remains undervalued relative to its peers,” Roberts said that the valuation gap is narrowing, and “I’m convinced that as we continue to deliver on our game plan to boost profitability, Petro-Canada will trade in line with its peers.”

Roberts’ news that Petro-Canada would ramp up its Arctic exploration was confirmed by Graeme Phipps, the company’s exploration and international vice president, who was speaking at a Ziff Energy conference in Calgary. Phipps said drilling plans include spending more than C$650 million, which translates into 22 wells in the territory. He also told the attendees that he expects “significant seismic and drilling activity” within the next four years that would lead up to the possible construction of a gas pipe to the Lower 48.

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