Hard times hit Canadian companies in 1991 as a number reported losses or sharply reduced profits.
Before a change in accounting procedures, Imperial Oil Ltd. recorded a sizable loss for the year. It also disclosed further details of a campaign to cut costs through a major rationalization of its downstream operations (OGJ, Feb. 10, Newsletter).
Imperial's move followed an announcement by Petro-Canada that it will close 1,100 service stations and mothball or sell two refineries (OGJ, Feb. 3, p. 22). Shell Canada Ltd. also is reorganizing and reducing the size of its retail gasoline network.
Canadian companies have trimmed payrolls by more than 10,000 jobs in the past 3 years, and several companies are reviewing their staff levels.
All financial results are in Canadian dollars.
IMPERIAL RESULTS
Imperial, easily Canada's biggest oil company, had a 1991 profit of $162 million, compared with a 1990 profit of $256 million.
The company earlier reported a 1991 operating loss of $36 million, compared with a profit of $522 million in 1990 but then implemented new accounting procedures.
Imperial is expected to announce a major restructuring of its downstream operations, including closure of several refineries, this month. It recently disclosed plans to lay off 1,700 employees, close 1,000 service stations, and consolidate its management structure.
Imperial, a unit of Exxon Corp., currently has a staff of more than 11,000 and a network of 4,200 service stations. The station closures will be made during several years. Any refinery closures would increase the projected staff cuts of 1,700. The announced cuts will involve about 1,000 employees in downstream operations and 460 in the resources division.
Imperial Chairman Arden Haynes said the cuts are necessary to increase cost efficiency and productivity in the face of declining demand for gasoline and weak prices for crude oil, natural gas, and chemicals,
The company will restructure its operating divisions to centralize management and support functions. Imperial units Esso Resources Canada Ltd., Esso Petroleum Canada, and Esso Chemical Canada will become divisions of parent Exxon,
OTHER COMPANIES
Petro-Canada reported a loss of $598 million for 1991, much of it due to writedowns on assets. It had an operating loss of $143 million, compared with a profit of $176 million in 1990. Downstream losses and writedowns totaled $488 million in 1991. The resources division reported a profit of $31 million in 1991, compared with a profit of $199 million in 1990.
Petro-Canada reported a $379 million after-tax writedown for restructuring in its products division and a $95 million after-tax cost related to sale of part of its interest in the Syncrude Canada Ltd. oilsands operation in Alberta.
Chairman Bill Hopper said Petro-Canada has been unable to invest in a number of opportunities in western Canada and has cut overseas exploration.
Nova Corp., Calgary, reported a loss of $629 million on operations in 1991. The loss compared with a 1990 profit of $203 million. A major contributor to the loss was a $675 million restructuring charge applied to Nova's petrochemical division. It also took a writedown of $259 million on sale of its 43% interest in Husky Oil Ltd. to Hong Kong interests (OGJ, Jan. 26, p. 29). The company had an operating profit of $46 million before the restructuring charge.
Shell Canada earned $12 million in 1991, down from net profit of $317 million in 1990. Oil products and chemicals units posted yearend losses, while the resources unit's 1991 profits were $130 million, compared with $153 million in 1990.
Shell Canada Pres. J.M. MacLeod said, "Improvements in earnings for 1992 and thereafter will depend largely on recovery in the economy, retail gasoline market forces, and internal strategies that are being implemented to enhance profitability. Additional resources earnings are expected as full production at Caroline field is achieved in first half 1993."
Gulf Canada Resources Ltd. reported a loss of $27 million for 1991. The loss included a $90 million after tax provision associated with its decision to withdraw from the Hibernia oil field development project off Newfoundland and a $60 million after tax gain from sale of interests in Caroline natural gas field in Alberta.
PanCanadian Petroleum Ltd., Calgary, reported a 1991 profit of $47.5 million, compared with 1990 profits of $211.6 million.
The company took one time writedowns of $52 million on its U.S. properties and $26 million on its interest in the OSLO oilsands project in Alberta.
Total Canada Oil & Gas Ltd.'s 1991 operating earnings totaled $42.8 million, compared with $51.7 million in 1990.
Bow Valley Industries Ltd. reported a $270 million writedown on its oil and gas assets for 1991. About $180 million stemmed from lower oil and gas prices, $20 million from a reevaluation of its interests in Whiterose oil field off Newfoundland, and $50 million from other oil and gas properties.
The writedowns were caused by accounting tests requiring annual reevaluation of assets on the basis of current prices and costs.
Bow Valley's complete yearend results are to be released soon.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
