CANADA: Giant profits for energy

by CP (EDMONTON SUN)

Record production at the Cold Lake heavy oil project in northern Alberta lifted Imperial Oil Ltd. (TSX:IMO) to its fattest annual profit in history - about $3.04 billion in 2006 - with help from lower taxes and stronger refining and marketing and petrochemical operations.


Canada's largest integrated oil company said yesterday it topped the previous record profit of $2.6 billion or $2.53 a share in 2005. High world oil prices and rising production were a key component of the year-over-year profit surge.

However, things began to slip in the fourth quarter, when Imperial earned $794 million or 83 cents a share, down from $1.02 billion or $1 a share the year before. Annual revenues fell to $24.8 billion from $28.2 billion in 2005. Cold Lake averaged a record 152,000 barrels a day during 2006, surpassing the previous record of 139,000 barrels a day in 2005. Imperial's U.S. parent Exxon Mobil's record net income of $39.5 billion US was criticized in the U.S. Senate as "outlandish," but Exxon wasn't alone among oil and gas entities posting a huge profit in 2006.

Yesterday alone, three other companies - Royal Dutch Shell PLC, Marathon Oil Corp. and Valero Energy Corp. - also reported best-ever full-year profits.

The four companies combined had earnings of $75.6 billion US last year. Royal Dutch Shell beat forecasts, but pointed to tough times ahead by issuing reduced growth targets and forecasting higher costs and lower refining margins.

For 2006 as a whole, Shell profit was up 12% at $25.4 billion, a UK corporate record, analysts said. Fourth-quarter profit was $6 billion.

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