Petro-Canada Can Wait to Access Debt Markets Until 2010

Petro-Canada says it can ride out the current economic storm and won’t need to access the debt markets until 2010.

In a grab bag of updates announced at Petro-Canada’s annual investor day this week, Petro-Canada said it has C$6.5-billion in cash and unused credit capacity that gives it room to operate until 2010 without having to access more debt. The company said it has a debt-to-debt+equity ratio of 20% and a debt-to-cash flow ratio of 0.9x.

In addition to its strong balance sheet, Petro-Canada focused its talk to investors on prospects for its international and offshore division. Divided into five main parts, including East Coast Canada, North Sea, Syria, Libya, and Trinidad and Tobago. the company said the division’s 2009 production guidance is about 220,000 barrels a day.

Scotia Capital analyst Mark Polak said in a note to clients the production guidance was in line with his estimate, “although production is expected to decrease about 5% annually due to natural field life declines.”

He added:

The plus side is the company has many future projects which could deliver 5%-10% per annum growth, however, these projects have yet to be sanctioned so accretive value is still minimal.

Mr. Polak told clients the outlook on the company remains virtually the same following the updates. He said the stock is cheaply valued, but that re-valuation is unlikely in 2009. He maintained his “sector perform” rating and one-year target of C$33 per share.

Comments

[K. Argenta:]

The "Canroy's" in upper Canada are going to do better if what our President-Elect said is true. I thing he said ,no offshore drilling will be allowed. But 'Canada' is a different country, and they have plenty of Black Gold to back themselves up. And with the big 3 in turmoil, they will or should start producing better fuel efficent cars/trucks in the future or I hope so?.I would like to see the U.S. wean itself off of "foreign" oil, but with no offshore drilling what are we supposed to do.

2008 Dec 04 01:48 PM