Petro-Canada And Libyan National Oil Corporation Sign New EPSA Contracts

Petro-Canada announced today that it has signed six new exploration and production sharing agreements (EPSAs) with the Libyan National Oil Corporation (NOC). The commercial terms of the new agreements, including the signing bonus, match those announced when Heads of Agreement were signed in December, 2007 and were ratified as of the signing, with an effective date of January 1, 2008.

The new EPSA agreements have an expected duration of 30 years and will result in the redevelopment of existing producing fields by Harouge Oil Operations (a joint venture operation co-owned with NOC) and a significant exploration program operated by Petro-Canada.

Under the new agreements, Petro-Canada will pay 50% of all development costs and will receive an initial 12% entitlement share of production. Petro-Canada estimates that there are gross contingent and prospective resources of almost two billion barrels of oil associated with the redevelopment program, requiring a total investment of approximately $7 billion US gross. Over the next five to seven years, the redevelopment program is expected to double current production levels from existing fields to approximately 200,000 barrels of oil per day (gross).

Petro-Canada also expects to invest $460 million US for an exploration program in the Sirte region, one of the world's most prolific basins. In the last program, seven successes were achieved from the nine exploration and appraisal wells drilled by Harouge Oil Operations. The proposed exploration program includes 10,000 square kilometres of 3D seismic, 600 kilometres of 2D seismic, and 50 exploration and appraisal wells. Petro-Canada will pay 100% of all exploration costs. Success from this program could materially add to reserves and production.

The initial reserves impact of the new EPSA contracts will be reflected in Petro-Canada's 2008 reserves statement. Beyond this point, on a proved and probable basis the majority of reserves will be booked as individual field plans mature over the next two to five years.