Petro-Canada: No Adverse Impact from Possible Tax Increases Detected

Buy-recommended Petro-Canada (PCZ) offers currently estimated net present value [NPV] of $65 a share concentrated 70% on oil production, 16% on downstream refining/marketing and 14% on natural gas. Third quarter results reported today display oil volume growth primarily offshore Eastern Canada.

High cash flow from oil production capitalized at an unlevered cash flow multiple (PV/Ebitda) related to reserve life (Adjusted R/P) supports estimated NPV. Estimates do not reflect any adverse impact from possible tax increases following the outrageous recommendations of an Alberta government-appointed royalty review panel on September 18.

Premier Ed Stelmach may give his specific recommendations later today that may then take longer to be digested and implemented. Canada proves that no government is without risk to investors. Taxes are a large part of the driving force behind the rising trend in oil price.

Originally published on October 25, 2007.

PCZ 1-yr chart: