Explore BrainMass

Petro Canada Pre 1990s vs Post 1990's: Were performance, efficiency and profits better when they were private or public? Why?

Please analyze

Petro Canada Pre 1990s (when they were a Crown Corporation) vs Post 1990's (when they were privatized)

Were performance, efficiency and profts better when they were private or public? why? (using financials)

What advantages did petro canada have when they were a crown corporation? what disadvantages?

What advantages does petro canada have now that they are a private corporation? what disadvantages?

If this needs more credits please let me know, im also conducting my own research right now aswell, so i'll probably be back with questions! thanks

Solution Preview

** Please see the attached file. **

Were performance, efficiency and profits better when they were private or public? Why? (Using financials)
In the first years of privatization the value of the shares dropped to $8 from 13$ as the firm suffered a huge loss of $603 million. The main reason was the devaluation of some assets. But after then the company reduced the number of properties in which it had a direct interest, reduced its annual operating costs by $300 million and it went from a staff of close to 11,000 to only about 5,000 employees. Between this year and today the company purchased several companies like Amerada Hess Canada , Veba Oil & Gas, UK North Sea, Intrepid Energy and made strategic alliances with firms like Norsk Hydro. These moves helped the company to increase production and exploration opportunities, get access to offshore expertise, and expand its proved oil and gas reserves. All these new developments strengthened the company's operating base and provided potential for more growth.

The revenues are increased , for example the firm recorded revenues of C$12,221 million (approximately $9682.1 million) during the fiscal year ended December 2003, an increase of 23.2% over 2002. During the fiscal year 2003, upstream division recorded revenues of C$5138 million (approximately $4070.8 million), a 44.2% increase over fiscal 2002. In the same period, the downstream division recorded revenues of C$8152 million approximately $6458.8 million), an increase of 11.4% over fiscal 2002. The company also recorded an increase in revenues of 15.6% in fiscal 2002. This is a significant rise in revenues. However the firm also has a high debt. The company's long-term debt was C$2223 million (approximately $1761.2 million) during fiscal year 2003 which was about 18.1% of the company's revenues. The debt for the company is expected to increase further in the second half of 2004 due to completion of the Prima acquisition. This high indebtedness limits the firm's ability to undertake further financing in future. Petro-Canada's return on assets is 9.33 as compared to the industry average of 11.67. Its return on investment is 10.98 as compared to the industry average ...

Solution Summary

The expert examines Petro Canada Pre 1990s versus Post 1990's performance. The efficiency and profits for private or public companies are determined.