- Nearly 90% of capital program focused on delivering profitable growth and improving base business profitability - Short-term decline in upstream production reversed in 2006, with more to come in 2007 and 2008 - Downstream investment shifts from regulatory spending to value-adding conversion projects CALGARY, Dec. 15 /PRNewswire-FirstCall/ -- Petro-Canada's board of directors approved a capital and exploration expenditure program totalling $3.4 billion for 2006, about equal to the program in 2005. "We are beginning to see the fruits of our building program, with a return to production growth over the next few years and a shift to value- adding conversion projects in our Downstream," said Ron Brenneman, president and chief executive officer. The 2006 capital program includes: $1.8 billion directed to growth projects, exploration and new venture developments; $1.0 billion to replace reserves in core areas; $395 million to enhance existing assets and to improve profitability in the base business; and $265 million to comply with new regulations. The 2006 capital expenditure program is expected to be funded from cash flow. Petro-Canada's upstream production is expected to be in the range of 425,000 to 450,000 barrels of oil equivalent per day (boe/d) in 2006. Production for the full year 2005 is expected to be 415,000 to 430,000 boe/d, in line with previous guidance. The expected growth in 2006 production is largely due to additional volumes from White Rose, the Syncrude Stage III expansion, De Ruyter start-up and a new well pad at MacKay River. Brenneman continued, "The 2006 program funds projects in all of our businesses, Upstream and Downstream. With such a broad range of opportunities in our portfolio, we have been able to select those that are most value-adding for next year's program." Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and the downstream sectors of the industry in Canada and internationally. Its common shares trade on the Toronto Stock Exchange under the symbol PCA and on the New York Stock Exchange under the symbol PCZ. OUTLOOK - CAPITAL EXPENDITURES This release contains forward-looking statements. Such statements are generally identifiable by the terminology used, such as "plan," "anticipate," "intend," "expect," "estimate," "budget" or other similar wording. Forward- looking statements in this release include, but are not limited to, forecasts relating to oil and gas production levels and capital expenditures. Further detail regarding the forward-looking information contained herein can be found on page six of this release. Capital Expenditures By Priorities In 2006, nearly 90% of the capital program will support delivering profitable growth and improving base business profitability. This is up from nearly 80% in these categories in 2005. The remaining 10% of the 2006 capital program is directed toward complying with regulations and enhancing existing assets. This portion of the program was larger in 2005 primarily due to investments to produce clean burning fuels in the Downstream business. ------------------------------------------------------------------------- Capital 2005 Outlook 2006 Outlook Investment As at As at 2006 Priorities Jul. 26, Dec. 15, Highlights (millions of dollars) 2005(1) 2005(1) ------------------------------------------------------------------------- Producing clean Regulatory compliance $ 630 $ 265 burning diesel fuel ------------------------------------------------------------------------- Enhancing existing Improving reliability assets 135 155 at key facilities ------------------------------------------------------------------------- Developing the retail and wholesale marketing networks; de-bottlenecking the lubricants plant; and Improving base business improving refinery profitability 150 240 yield ------------------------------------------------------------------------- Investing for immediate impact Reserve replacement in across the four core areas 1,110 1,025 upstream businesses ------------------------------------------------------------------------- Adding future production with medium-term growth New growth projects 1,035 1,375 projects ------------------------------------------------------------------------- Investing in exploration activity in Western Canada, International, and the U.S. Rockies; and Exploration and new evaluating new ventures for long-term in situ oil sands growth 385 375 developments ------------------------------------------------------------------------- Total $ 3,445 $ 3,435 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital Expenditures By Business Spending will occur across all four upstream business units and in the Downstream business, reflecting quality investment opportunities in each business. ------------------------------------------------------------------------- 2005 Outlook 2006 Outlook As at As at (millions of dollars) July 26, 2005(1) December 15, 2005(1) ------------------------------------------------------------------------- Upstream North American Natural Gas $ 700 $ 850 East Coast Oil 350 305 Oil Sands 490(2) 355 International 795 865 ---------------- ---------------- Subtotal 2,335 2,375 ------------------------------------------------------------------------- Downstream Refining 915 840 Marketing 115 150 Lubricants 50 40 ---------------- ---------------- Subtotal 1,080 1,030 ------------------------------------------------------------------------- Corporate 30 30 ------------------------------------------------------------------------- Total $ 3,445 $ 3,435 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Effective January 1, 2005, the Company changed the presentation of cash flow in the Consolidated Statement of Cash Flows pursuant to recent interpretations from the United States (U.S.) Securities and Exchange Commission (SEC). Previously, all exploration expenses were classified as investing activities. With the change, general and administrative, and geological and geophysical (including seismic) exploration expenses are treated as a reduction of cash flow from operating activities. Capital expenditures in the table are shown on this basis. The 2005 outlook has been restated to reflect the change in presentation of cash flow, resulting in a decrease in 2005 capital expenditures of $170 million from that previously disclosed in the Q2 2005 Quarterly Report. (2) Excludes the initial purchase obligation ($264 million on a discounted basis) in connection with the Company's acquisition of an interest in the Fort Hills oil sands project. This purchase obligation will be reduced over time by Petro-Canada funding a portion of UTS Energy Corporation's (UTS) share of the next $2.5 billion of development capital. Petro-Canada's 2005 estimated expenditures incremental to the initial purchase obligation are included in the outlook. On November 30, 2005, Petro-Canada and UTS finalized agreements with Teck Cominco Limited (Teck Cominco) that allow Teck Cominco to acquire a 15% interest in the Fort Hills oil sands project. Petro-Canada remains the project operator with a 55% interest, with UTS holding a 30% stake. Teck Cominco will pay for their interest by funding $475 million of Petro-Canada's and UTS' future capital expenditures. OUTLOOK - CONSOLIDATED PRODUCTION Upstream production is expected to average between 425,000 to 450,000 boe/d in 2006. Petro-Canada's production range is higher than in 2005, primarily due to additional production from White Rose, DeRuyter start-up, the Syncrude Stage III expansion and a new well pad at MacKay River. Factors that may impact production during 2006 include reservoir performance, drilling results, facility reliability, the ramp up of production at White Rose and the successful execution of the turnaround at Terra Nova. ------------------------------------------------------------------------- 2005 Outlook (+/-) 2006 Outlook (+/-) As at As at (thousands of boe/d) July 26, 2005 December 15, 2005 ------------------------------------------------------------------------- North American Natural Gas - Natural gas 113 106 - Liquids 14 14 ------------------------------------------------------------------------- East Coast Oil 75 94 ------------------------------------------------------------------------- Oil Sands - Syncrude 26 34 - MacKay River 21 25 ------------------------------------------------------------------------- International - North Africa/Near East 115 113 - Northwest Europe 45

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