Execution of Petro-Canada's Strategy Delivers Another Solid Quarter

CALGARY, ALBERTA, Oct 23 (MARKET WIRE) --
Highlights

- Robust cash flow, a strong balance sheet and liquidity provide
financial stability in a turbulent market

- Reliable upstream operations deliver strong production in line with
guidance

- Construction of the Edmonton refinery conversion project (RCP)
completed and refinery on track for fourth quarter 2008 startup

Petro-Canada announced today third quarter operating earnings of $1,242
million ($2.56/share), up 97% from $630 million ($1.29/share) in the
third quarter of 2007. Third quarter 2008 cash flow from operating
activities before changes in non-cash working capital was $2,116 million
($4.37/share), up 72% from $1,229 million ($2.52/share) in the same
quarter of last year.

Net earnings were $1,251 million ($2.58/share) in the third quarter of
2008, compared with $776 million ($1.59/share) in the same quarter of
2007.

"Our businesses are running reliably and are generating solid cash flow
to help fund our growth projects," said Ron Brenneman, president and
chief executive officer.

"We've always been a financially conservative company - in the way we
fund our operations and in how we evaluate and finance our growth
projects," added Brenneman. "This prudent, long-term view positions us
well during these volatile economic times."

Third Quarter Results

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Three months ended Nine months ended
(millions of Canadian September 30, September 30,
dollars, except as noted) 2008 2007 2008 2007
----------------------------------------------------------------------------
Consolidated Results
Operating earnings (1) $ 1,242 $ 630 $ 3,339 $ 2,015
- $/share 2.56 1.29 6.90 4.10
Net earnings 1,251 776 3,825 2,211
- $/share 2.58 1.59 7.90 4.50
Cash flow from operating
activities before changes
in non-cash working
capital (2) 2,116 1,229 5,947 3,745
- $/share 4.37 2.52 12.29 7.62
Dividends - $/share 0.20 0.13 0.46 0.39
Share buyback program - 220 - 735
- millions of shares - 4.0 - 14.0
Capital expenditures $ 1,439 $ 992 $ 4,596 $ 2,508
Weighted-average common
shares outstanding
(millions of shares) 484.4 487.6 484.0 491.6
Total production net before
royalties (thousands of
barrels of oil
equivalent/day - Mboe/d) (3) 424 436 422 422
Operating return on capital
employed (%) (4)
Upstream 39.7 26.0
Downstream (4) 3.1 12.5
Total Company (4) 23.5 19.6
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(1) Operating earnings (which represent net earnings, excluding gains or
losses on foreign currency translation of long-term debt and on sale of
assets, excluding the change in fair value of the Buzzard derivative
contracts (applies to 2007 and prior only), including the Downstream
estimated current cost of supply adjustment and excluding mark-to-market
valuations of stock-based compensation, income tax adjustments, asset
impairment, insurance proceeds and surcharges and purchased crude oil
inventory write-downs - see page 2 NON-GAAP MEASURES) are used by the
Company to evaluate operating performance.
(2) From operating activities before changes in non-cash working capital
(see page 2 NON-GAAP MEASURES).
(3) Total production includes natural gas converted at six thousand cubic
feet (Mcf) of natural gas for one barrel (bbl) of oil.
(4) Returns calculated on a 12-month rolling basis. In 2008, Downstream and
Total Company operating return on capital employed includes the
Downstream estimated current cost of supply adjustment.

NON-GAAP MEASURES

Cash flow and cash flow from operating activities before changes in
non-cash working capital are commonly used in the oil and gas industry
and by Petro-Canada to assist management and investors in analyzing
operating performance, leverage and liquidity. In addition, the Company's
capital budget was prepared using anticipated cash flow from operating
activities before changes in non-cash working capital, as the timing of
collecting receivables or making payments is not considered relevant for
capital budgeting purposes. Operating earnings represent net earnings,
excluding gains or losses on foreign currency translation of long-term
debt and sale of assets, excluding the change in fair value of derivative
contracts associated with the Buzzard acquisition (applies to 2007 and
prior only), including the Downstream estimated current cost of supply
adjustment and excluding mark-to-market valuations of stock-based
compensation, income tax adjustments, asset impairment charges, insurance
proceeds and surcharges, and purchased crude oil inventory write-downs.
Operating earnings are used by the Company to evaluate operating
performance. Cash flow, cash flow from operating activities before
changes in non-cash working capital and operating earnings do not have
standardized meanings prescribed by Canadian generally accepted
accounting principles (GAAP) and, therefore, may not be comparable with
the calculations of similar measures for other companies. For a
reconciliation of cash flow and cash flow from operating activities
before changes in non-cash working capital to the associated GAAP
measures, refer to the table on page 4. For a reconciliation of operating
earnings to the associated GAAP measures, refer to the table below.

On January 1, 2008, the Company adopted Canadian Institute of Chartered
Accountants (CICA) Section 3031, Inventories, and now assigns costs for
its crude oil and refined petroleum products inventories on a "first-in,
first-out" (FIFO) basis whereas, previously, these costs were assigned on
a "last-in, first-out" (LIFO) basis. To facilitate a better understanding
of the Company's Downstream performance, operating earnings for 2008
onward are being presented on an estimated current cost of supply basis,
which is a non-GAAP measure. On this basis, cost of sales is determined
by estimating the current cost of supply for all volumes sold in the
period after making allowance for the estimated tax effect, instead of
using a FIFO basis for valuing inventories. Operating earnings calculated
on this basis do not represent the application of a LIFO basis of valuing
inventories, used prior to 2008, and, therefore, the Downstream estimated
current cost of supply adjustment does not have comparatives.

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Three months ended September 30,
(millions of Canadian dollars,
except per share amounts) 2008 ($/share) 2007 ($/share)
----------------------------------------------------------------------------
Net earnings $ 1,251 $ 2.58 $ 776 $ 1.59
----------------------------------------------------------------------------
Foreign currency translation
gain (loss) on long-term debt (1) (103) 78
Change in fair value of Buzzard
derivative contracts (2) - 70
Gain (loss) on sale of assets (3) 91 8
Downstream estimated current
cost of supply adjustment (128) -
Mark-to-market valuation of
stock-based compensation 160 (10)
Income tax adjustments (4) (3) -
Asset impairment charge (5) - -
Insurance proceeds net of
surcharges - -
Purchased crude oil inventory
write-downs (6) (8) -
----------------------------------------------------------------------------
Operating earnings $ 1,242 $ 2.56 $ 630 $ 1.29
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Nine months ended September 30,
(millions of Canadian dollars,
except per share amounts) 2008 ($/share) 2007 ($/share)
----------------------------------------------------------------------------
Net earnings $ 3,825 $ 7.90 $2,211 $ 4.50
----------------------------------------------------------------------------
Foreign currency translation
gain (loss) on long-term debt (1) (164) 198
Change in fair value of Buzzard
derivative contracts (2) - (18)
Gain (loss) on sale of assets (3) (5) 55
Downstream estimated current
cost of supply adjustment 294 -
Mark-to-market valuation of
stock-based compensation 111 (99)
Income tax adjustments (4) 253 48
Asset impairment charge (5) (24) -
Insurance proceeds net of
surcharges 29 12
Purchased crude oil inventory
write-downs (6) (8) -
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Operating earnings $ 3,339 $ 6.90 $2,015 $ 4.10
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(1) Foreign currency translation reflected gains or losses on United States
(U.S.) dollar-denominated long-term debt not associated with the self-
sustaining International business unit and the U.S. Rockies operations
included in the North American Natural Gas business unit.
(2) During the fourth quarter of 2007, the Company entered into derivative
contracts to close out the hedged portion of its Buzzard production from
January 1, 2008 to December 31, 2010.
(3) In the third quarter of 2008, the International & Offshore business unit
completed the sale of its Denmark assets in the International segment,
resulting in a gain on sale of $107 million before-tax ($82 million
after-tax). In the second quarter of 2008, the North American Natural
Gas business unit completed the sale of its Minehead assets in Western
Canada, resulting in a loss on sale of $153 million before-tax ($112
million after-tax). In addition to the sale of these assets there were
additional, less significant, asset sales resulting in gains of $38
million before-tax ($25 million after-tax) for the nine months ended
September 30, 2008. The sale of these assets is aligned with the
business units' strategies to continuously optimize the assets in their
portfolio.
(4) In the second quarter of 2008, the International business segment
recorded a $230 million future income tax recovery due to the
ratification of the Libya Exploration and Production Sharing Agreements
(EPSAs).
(5) In the first quarter of 2008, the North American Natural Gas business
unit recorded a depreciation, depletion and amortization (DD&A) charge
of $35 million before-tax ($24 million after-tax) for accumulated
project development costs relating to the proposed liquefied natural
gas (LNG) re-gasification facility at Gros-Cacouna, Quebec, which has
been postponed due to global LNG business conditions.
(6) In the third quarter of 2008, the Oil Sands business unit recorded a $38
million before-tax ($26 million after-tax) charge for the write-down of
crude oil inventory purchased for line fill for the Edmonton RCP.
Partially offsetting this write-down, Shared Services and Eliminations
recorded a $26 million before-tax ($18 million after-tax) recovery to
recognize the Downstream's expected future margins from refining this
crude oil inventory and selling the refined petroleum products. As a
result, the Company recorded a net write-down of $12 million before-tax
($8 million after-tax).

Earnings Variances

Q3/08 VERSUS Q3/07 FACTOR ANALYSIS

Operating Earnings

(millions of Canadian dollars, after-tax)

To view a graph for the Operating Earnings please visit the following
link: http://media3.marketwire.com/docs/1023pcae1.pdf

Operating earnings increased 97% to $1,242 million ($2.56/share) in the
third quarter of 2008, compared with $630 million ($1.29/share) in the
third quarter of 2007. The increase in third quarter operating earnings
reflected the positive impact of higher realized upstream prices ($610
million) and lower other expenses(1) ($180 million). The gains were
partially offset by lower upstream production(2) ($(47) million), lower
Downstream margins(3) ($(9) million) and higher operating, general and
administrative (G&A) ($(94) million), and DD&A and exploration expenses
($(28) million).

(1) Other mainly included interest expense, foreign exchange, changes in
effective tax rates and upstream inventory movements.

(2) Upstream volumes included the portion of DD&A expense associated with
changes in upstream production levels.

(3) Downstream margin included the estimated current cost of supply
adjustment.

Operating Earnings by Segment

(millions of Canadian dollars, after-tax)

To view a graph for the Operating Earnings by Segment please visit the
following link: http://media3.marketwire.com/docs/1023pcae2.pdf

The increase in third quarter operating earnings on a segmented basis
reflected higher North American Natural Gas ($101 million), Oil Sands
($125 million), East Coast Canada ($104 million) and International ($281
million) operating earnings and lower Shared Services costs ($4 million).
The results were partially offset by slightly lower Downstream operating
earnings ($(3) million).

Net earnings in the third quarter of 2008 increased 61% to $1,251 million
($2.58/share), compared with $776 million ($1.59/share) during the same
period in 2007. Net earnings in the third quarter of 2008 were higher
than in the third quarter of 2007 due to higher operating earnings, gains
on sale of assets, a recovery from the mark-to-market valuation of
stock-based compensation and the benefit associated with settling the
Buzzard derivative contracts in the fourth quarter of 2007. These factors
were partially offset by losses on foreign currency translation of
long-term debt.

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Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Cash flow from operating
activities $ 1,279 $ 1,340 $ 5,193 $ 3,941
Increase (decrease) in non-cash
working capital related to
operating activities 837 (111) 754 (196)
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Cash flow from operating
activities before changes in
non-cash working capital $ 2,116 $ 1,229 $ 5,947 $ 3,745
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During the third quarter of 2008, cash flow from operating activities
before changes in non-cash working capital was $2,116 million
($4.37/share), up from $1,229 million ($2.52/share) in the same quarter
of 2007. The increase in cash flow from operating activities before
changes in non-cash working capital reflected higher net earnings.

Operating Highlights

Third quarter production averaged 424,000 barrels of oil equivalent/day
(boe/d) net to Petro-Canada in 2008, down 3% from 436,000 boe/d net in
the same quarter of 2007. Lower volumes reflected decreased East Coast
Canada and International production, partially offset by increased Oil
Sands production. North American Natural Gas production was relatively
unchanged.

The Downstream successfully completed construction of the Edmonton
refinery for the RCP. Marketing performance was strong in the quarter,
partially offset by lower Refining and Supply earnings.

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Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
----------------------------------------------------------------------------
Upstream - Consolidated
Production before royalties
Crude oil and natural gas
liquids (NGL) production net
(thousands of
barrels/day - Mb/d) 306 315 304 300
Natural gas production net,
excluding injectants (millions
of cubic feet/day - MMcf/d) 709 723 709 730
Total production net (Mboe/d) (1) 424 436 422 422
Average realized prices
Crude oil and NGL
($/barrel - $/bbl) 114.11 74.32 107.85 69.42
Natural gas ($/thousand
cubic feet - $/Mcf) 8.68 5.28 8.60 6.47
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Downstream
Petroleum product sales
(thousands of cubic
metres/day - m3/d) 52.7 53.6 52.2 52.8
Average refinery utilization (%) 75 99 90 99
Downstream operating earnings
after-tax (cents/litre) (2) 2.1 2.1 1.1 3.8
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(1) Total production includes natural gas converted at six Mcf of natural
gas for one bbl of oil.
(2) In 2008, Downstream operating earnings after-tax includes the Downstream
estimated current cost of supply adjustment.

BUSINESS STRATEGY

Petro-Canada's strategy is to create shareholder value by delivering
long-term, profitable growth and improving the profitability of the base
business.

Petro-Canada's capital program supports bringing on seven major projects
over the next several years to deliver long-term profitable growth. For
the remainder of 2008, the Company expects to start up the project to
convert the Edmonton refinery to process lower cost, oil sands-based
feedstock, and make a final investment decision (FID) on the Fort Hills
mining and upgrading project. These projects are expected to add
significant earnings and cash flow.

Petro-Canada continually works to strengthen its base business by
improving the safety, reliability and efficiency of its operations. For
the remainder of 2008, the Company is focused on delivering upstream
production in line with guidance.

Outlook

Operational Updates

- MacKay River achieved a new production record, averaging 29,700
barrels/day (b/d) for the month of September 2008.

- No major turnarounds planned for the remainder of 2008 in North
American Natural Gas, Oil Sands, East Coast Canada or the Downstream. -
Buzzard had expected to commence its planned maintenance turnaround in
August 2008 but, due to adverse weather conditions, this seven- to
nine-day turnaround has been delayed to the fourth quarter of 2008.

Major Project Milestones

- Construction of the Edmonton RCP was completed at the end of the third
quarter and the refinery is on track for startup in the fourth quarter of
2008.

- The Montreal coker investment decision is pending resolution of the
labour dispute.

- Engineering and fabrication of the North Amethyst portion of the White
Rose Extensions project is being advanced, with the project on schedule
to deliver first oil in late 2009 or early 2010.

- The Syria Ebla gas project is 35% complete, with first gas expected in
2010. Field construction and detailed engineering is in progress. An
appraisal well was drilled and tested in the third quarter of 2008,
resulting in better than expected production rates, and a second rig was
mobilized and 3D seismic operations began in August 2008.

- With six new EPSAs signed by the Libya National Oil Corporation,
implementation work is focusing on preparing the Amal field development
program, capturing early opportunities to increase production and
initiating the new exploration program. Three seismic crews were deployed
by the end of the third quarter of 2008.

- The MacKay River expansion project continues with design refinement and
receiving and reviewing lump sum construction bid contracts. FID is
expected in the first quarter of 2009.

- The estimated all-in capital costs for the Fort Hills project, as
currently conceived, are expected to increase by approximately 50% from
the initial estimate of $18.8 billion (including third party costs)
announced in June 2007. The partners are looking at different
configurations and timing options to arrive at the best project
combination. In the near term, the partners contemplate making an
investment decision only with respect to the mining portion of the
project and deferring a decision to construct the upgrader portion, which
would substantially reduce project costs prior to first oil. The partners
remain committed to mine production in 2011. Final regulatory decisions
on the upgrader and the proposed amendment to the approved mine plan are
anticipated by year-end 2008. With a definitive cost estimate, upgrader
regulatory approval and partner approvals in place, a decision on how
best to proceed is expected by year-end 2008.

BUSINESS UNIT RESULTS

UPSTREAM

North American Natural Gas

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Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings $ 165 $ 55 $ 339 $ 248
----------------------------------------------------------------------------
Gain (loss) on sale of
assets (1) 9 - (95) 41
Income tax adjustments - - - 1
Asset impairment charge (2) - - (24) -
----------------------------------------------------------------------------
Operating earnings $ 156 $ 55 $ 458 $ 206
----------------------------------------------------------------------------
Cash flow from operating
activities before changes
in non-cash working capital $ 336 $ 130 $ 1,004 $ 547
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(1) In the second quarter of 2008, the North American Natural Gas business
unit completed the sale of its Minehead assets in Western Canada,
resulting in a loss on sale of $153 million before-tax ($112 million
after-tax). The sale of these assets is aligned with the business
unit's strategy to continuously optimize the assets in its portfolio.
(2) In the first quarter of 2008, the North American Natural Gas business
unit recorded a DD&A charge of $35 million before-tax ($24 million
after-tax) for accumulated project development costs relating to the
proposed LNG re-gasification facility at Gros-Cacouna, Quebec, which has
been postponed due to global LNG business conditions.

In the third quarter of 2008, North American Natural Gas contributed
$156 million of operating earnings, compared with $55 million in the
third quarter of 2007. Higher realized prices and lower exploration
expenses were partially offset by higher operating and DD&A expenses.

North American Natural Gas production averaged 674 million cubic feet of
gas equivalent/day (MMcfe/d) in the third quarter of 2008, relatively
unchanged from 675 MMcfe/d in the same quarter of 2007. Production
reflected higher natural gas production in the U.S. Rockies and strong
performance in Western Canada.

Oil Sands

----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings $ 209 $ 110 $ 498 $ 187
----------------------------------------------------------------------------
Gain on sale of assets - - - 1
Income tax adjustments - - 2 7
Purchased crude oil inventory
write-downs (1) (26) - (26) -
----------------------------------------------------------------------------
Operating earnings $ 235 $ 110 $ 522 $ 179
----------------------------------------------------------------------------
Cash flow from operating
activities before changes in
non-cash working capital $ 285 $ 192 $ 684 $ 406
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----------------------------------------------------------------------------

(1) In the third quarter of 2008, Oil Sands recorded a $38 million
before-tax ($26 million after-tax) write-down of crude oil inventory
purchased for line fill for the Edmonton RCP. This write-down was
partially offset by a recovery of $26 million before-tax ($18 million
after-tax) recorded in Shared Services and Eliminations.

Oil Sands delivered operating earnings of $235 million in the third
quarter of 2008, up from $110 million in the third quarter of 2007.
Higher realized prices and production were partially offset by higher
operating costs.

Oil Sands production averaged 66,900 b/d in the third quarter of 2008, up
5% from 63,800 b/d in the third quarter of 2007. Increased production
primarily reflected increased reliability and capability at MacKay River,
partially offset by a planned 45-day turnaround of Coker 8-2 at Syncrude
that began in early September 2008.

International & Offshore

East Coast Canada

----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings (1) $ 397 $ 293 $ 1,157 $ 883
----------------------------------------------------------------------------
Terra Nova insurance proceeds - - 29 7
Income tax adjustments - - 2 5
----------------------------------------------------------------------------
Operating earnings $ 397 $ 293 $ 1,126 $ 871
----------------------------------------------------------------------------
Cash flow from operating
activities before changes
in non-cash working capital $ 501 $ 387 $ 1,431 $ 1,164
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(1) East Coast Canada crude oil inventory movements increased (decreased)
net earnings by $3 million before-tax ($2 million after-tax) and $(60)
million before-tax ($(41) million after-tax) for the three and nine
months ended September 30, 2008, respectively. The same factor increased
net earnings by $23 million before-tax ($15 million after-tax) and $48
million before-tax ($32 million after-tax) for the three and nine months
ended September 30, 2007, respectively.

In the third quarter of 2008, East Coast Canada contributed $397
million of operating earnings, up from $293 million in the third quarter
of 2007. Higher realized prices and lower exploration expenses were
partially offset by lower production and higher royalty payments.

East Coast Canada production averaged 90,600 b/d in the third quarter of
2008, down 11% from 102,100 b/d in the same period in 2007. Terra Nova's
production was lower due to a planned overhaul of a main power generator,
seal repairs in a gas lift riser and natural declines. White Rose
production was lower due to the impact of an unplanned shutdown in
September 2008 due to tanker offloading issues. These reductions were
partially offset by slightly higher Hibernia production due to the
positive impact of recent well workovers and strong reliability, which
offset natural declines.

International

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Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings (1) $ 483 $ 200 $ 1,491 $ 404
----------------------------------------------------------------------------
Change in fair value of Buzzard
derivative contracts (2) - 70 - (18)
Gain on sale of assets (3) 82 7 88 7
Scott insurance proceeds - - - 5
Income tax adjustments (4) (3) - 227 30
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Operating earnings $ 404 $ 123 $ 1,176 $ 380
----------------------------------------------------------------------------
Cash flow from operating
activities before changes in
non-cash working capital $ 653 $ 388 $ 1,844 $ 1,027
----------------------------------------------------------------------------
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(1) International crude oil inventory movements increased net earnings by
$12 million before-tax ($7 million after-tax) and $88 million before-tax
($18 million after-tax) for the three and nine months ended September
30, 2008, respectively. The same factor increased net earnings by $58
million before-tax ($13 million after-tax) and $28 million before-tax
($6 million after-tax) for the three and nine months ended September
30, 2007, respectively.
(2) During the fourth quarter of 2007, the Company entered into derivative
contracts to close out the hedged portion of its Buzzard production from
January 1, 2008 to December 31, 2010.
(3) In the third quarter of 2008, the International & Offshore business unit
completed the sale of its Denmark assets in the International segment,
resulting in a gain on sale of $107 million before-tax ($82 million
after-tax).
(4) In the second quarter of 2008, the International business unit recorded
a $230 million future income tax recovery due to the ratification of the
Libya EPSAs.

International contributed $404 million of operating earnings in the
third quarter of 2008, up from $123 million recorded in the third quarter
of 2007. Higher realized prices, foreign exchange gains and lower
operating and DD&A expenses were partially offset by lower production
volumes and increased exploration expenses. Higher exploration expenses
were due to well write-offs in Trinidad and Tobago, and Norway.

Net earnings in the third quarter of 2007 included a $70 million
unrealized gain and an $87 million realized loss on the Buzzard
derivative contracts.

International production averaged 154,100 boe/d in the third quarter of
2008, down 2% from 157,200 boe/d in the third quarter of 2007. Decreased
production primarily reflected natural declines in several North Sea
assets and a planned turnaround of the Triton facility in August. These
factors were partially offset by higher Buzzard production due to strong
operating performance and the weather-related deferral of a seven- to
nine-day turnaround planned for August.

Exploration Update

For the nine months ended September 30, 2008, Petro-Canada and its
partners finished operations on 14 of the up to 17 wells planned for the
year. Three of the wells were completed as natural gas discoveries
(Gubik-3 in the Alaska Foothills, Sancoche on Block 22 offshore Trinidad
and Tobago, and van Ghent in the Netherlands sector of the North Sea).
One well was completed as an oil discovery (Pink in the United Kingdom
(U.K.) sector of the North Sea). Two successful appraisal wells were
completed (Cassra 2 on Block 22 offshore Trinidad and Tobago, and Farigh
14-12 in Libya). Two wells were completed as non-commercial discoveries
(Maria in the U.K. sector of the North Sea and L5a-11 in the Netherlands
sector of the North Sea). Drilling of the Chandler-1 well in the Alaska
Foothills was suspended, as planned, for re-entry next season. Five wells
were dry and abandoned (Kwijika in the Northwest Territories, Gemini in
the U.K. sector of the North Sea, Tegu in Block 1a offshore Trinidad and
Tobago, Bene on Block 22 offshore Trinidad and Tobago, and Trow in the
Norwegian sector of the North Sea).

DOWNSTREAM
-----------------------------------------------------------------
-----------
Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings (loss) $ (27) $ 105 $ 457 $ 548
----------------------------------------------------------------------------
Gain on sale of assets - 1 2 6
Downstream estimated current cost of
supply adjustment (1) (128) - 294 -
Income tax adjustments - - 2 6
----------------------------------------------------------------------------
Operating earnings $ 101 $ 104 $ 159 $ 536
----------------------------------------------------------------------------
Cash flow from operating activities
before changes in non-cash working
capital $ 111 $ 187 $ 852 $ 860
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) On January 1, 2008, the Company adopted CICA Section 3031, Inventories,
and now assigns costs for its crude oil and refined petroleum products
inventories on a FIFO basis whereas, previously, these costs were
assigned on a LIFO basis. To facilitate a better understanding of the
Company's Downstream performance, operating earnings for 2008 onward are
being presented on an estimated current cost of supply basis, which is a
non-GAAP measure (see page 2 NON-GAAP MEASURES). On this basis, cost of
sales is determined by estimating the current cost of supply for all
volumes sold in the period after making allowance for the estimated tax
effect, instead of using a FIFO basis for valuing inventories. Operating
earnings calculated on this basis do not represent the application of a
LIFO basis of valuing inventories, used prior to 2008, and, therefore,
the Downstream estimated current cost of supply adjustment does not have
comparatives.

In the third quarter of 2008, the Downstream business contributed $101
million of operating earnings, down slightly from $104 million in the
same quarter of 2007.

Refining and Supply recorded third quarter 2008 operating earnings of $49
million, down compared with operating earnings of $58 million in the same
quarter of 2007. Lower operating earnings reflected four key items
discussed in order of impact. First, refinery yields in Edmonton were
lower due to operational upsets and planned turnaround activity for the
RCP. Second, operating costs increased because of maintenance and repair
activity, planned turnarounds and environmental costs associated with the
Quebec green levy. Third, fuel costs were higher. Fourth, gasoline
cracking margins were lower. These four key items were partially offset
by an increase in realized refining margins for asphalt, lubricants, and
petrochemical and light oil products, as well as higher distillate
cracking margins.

Marketing contributed third quarter 2008 operating earnings of $52
million, up compared with $46 million in the same quarter of 2007. In the
third quarter of 2008, Marketing results reflected higher fuel margins,
an increase in lubricants sales volumes and rising non-petroleum revenue,
partially offset by increased operating expenses due to higher fuel costs
associated with delivery and card fees.

CORPORATE

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Three months ended Nine months ended
Shared Services and Eliminations September 30, September 30,
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings (loss) $ 24 $ 13 $ (117) $ (59)
----------------------------------------------------------------------------
Foreign currency translation gain
(loss) on long-term debt (103) 78 (164) 198
Stock-based compensation recovery
(expense) (1) 160 (10) 111 (99)
Income tax adjustments - - 20 (1)
Purchased crude oil inventory
write-downs (2) 18 - 18 -
----------------------------------------------------------------------------
Operating loss $ (51) $ (55) $ (102) $ (157)
----------------------------------------------------------------------------
Cash flow used in operating
activities before changes in
non-cash working capital $ 230 $ (55) $ 132 $ (259)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Reflected the change in the mark-to-market valuation of stock-based
compensation.
(2) In the third quarter of 2008, Shared Services and Eliminations recorded a
$26 million before-tax ($18 million after-tax) recovery for the write-
down of crude oil inventory purchased for line fill for the Edmonton
RCP. The recovery recognized the Downstream's expected future margins
from refining this crude oil inventory and selling the refined petroleum
products, and partially offsets write-downs of $38 million before-tax
($26 million after-tax) recorded in Oil Sands.

Shared Services and Eliminations recorded an operating loss of $51
million in the third quarter of 2008, compared with a loss of $55 million
for the same period in 2007. The decrease in operating loss was due to
foreign exchange gains from transacting in U.S. dollars during the third
quarter of 2008, partially offset by higher interest expense.

The Company's financial capacity and flexibility have not been
significantly impacted by the recent turmoil in the financial markets due
to Petro-Canada's continuing ability to generate strong cash flow,
existing cash balances, significant credit facility capacity and lack of
near-term refinancing requirements. For 2009 and beyond, spending on
future large projects may result in annual capital expenditures exceeding
operating cash flow. The Company anticipates that additional funding
requirements will be met by external financing and that additional
financial leverage can be managed in the context of Petro-Canada's target
ranges.

Petro-Canada is one of Canada's largest oil and gas companies, operating
in both the upstream and downstream sectors of the industry in Canada and
internationally. The Company creates value by responsibly developing
energy resources and providing world class petroleum products and
services. Petro-Canada is proud to be a National Partner to the Vancouver
2010 Olympic and Paralympic Winter Games. Petro-Canada's common shares
trade on the Toronto Stock Exchange (TSX) under the symbol PCA and on the
New York Stock Exchange (NYSE) under the symbol PCZ.

The full text of Petro-Canada's third quarter release, including
Management's Discussion and Analysis (MD&A), can be accessed on
Petro-Canada's website at
http://www.petro-canada.ca/en/investors/845.aspx and will be available
through SEDAR at http://www.sedar.com/.

Petro-Canada will hold a conference call to discuss these results with
investors on Thursday, October 23, 2008 at 9:00 a.m. eastern daylight
time (EDT). To participate, please call 1-866-898-9626 (toll-free in
North America), 00-800-8989-6323 (toll-free internationally), or
416-340-2216 at 8:55 a.m. EDT. Media are invited to listen to the call by
dialing 1-866-540-8136 (toll-free in North America) or 416-340-8010.
Media are invited to ask questions at the end of the call. A live audio
broadcast of the conference call will be available on Petro-Canada's
website at http://www.petro-canada.ca/en/investors/845.aspx on October
23, 2008 at 9:00 a.m. EDT. Those who are unable to listen to the call
live may listen to a recording of the call approximately one hour after
its completion by dialing 1-800-408-3053 (toll-free in North America) or
416-695-5800 (pass code number 3269226#). Approximately one hour after
the call, a recording will be available on Petro-Canada's website.

LEGAL NOTICE - FORWARD-LOOKING INFORMATION

This news release contains forward-looking information. You can usually
identify this information by such words as "plan," "anticipate,"
"forecast," "believe," "target," "intend," "expect," "estimate," "budget"
or other terms that suggest future outcomes or references to outlooks.
Listed below are examples of references to forward-looking information:

- business strategies and goals

- future investment decisions

- outlook (including operational updates and strategic milestones)

- future capital, exploration and other expenditures

- future cash flows

- future resource purchases and sales

- construction and repair activities

- turnarounds at refineries and other facilities

- anticipated refining margins

- future oil and natural gas production levels and the sources of their
growth

- project development, and expansion schedules and results

- future exploration activities and results, and dates by which certain
areas may be developed or come on-stream

- retail throughputs

- pre-production and operating costs

- reserves and resources estimates

- royalties and taxes payable

- production life-of-field estimates

- natural gas export capacity

- future financing and capital activities (including purchases of
Petro-Canada common shares under the Company's normal course issuer bid
(NCIB) program)

- contingent liabilities (including potential exposure to losses related
to retail licensee agreements)

- environmental matters

- future regulatory approvals

- expected rates of return

Such forward-looking information is subject to known and unknown risks
and uncertainties. Other factors may cause actual results, levels of
activity and achievements to differ materially from those expressed or
implied by such information. Such factors include, but are not limited to:

- industry capacity

- imprecise reserves estimates of recoverable quantities of oil, natural
gas and liquids from resource plays, and other sources not currently
classified as reserves

- the effects of weather and climate conditions

- the results of exploration and development drilling, and related
activities

- the ability of suppliers to meet commitments

- decisions or approvals from administrative tribunals

- risks associated with domestic and international oil and natural gas
operations

- general economic, market and business conditions

- competitive action by other companies

- fluctuations in oil and natural gas prices

- refining and marketing margins

- the ability to produce and transport crude oil and natural gas to
markets

- fluctuations in interest rates and foreign currency exchange rates

- actions by governmental authorities (including changes in taxes,
royalty rates and resource-use strategies)

- changes in environmental and other regulations

- international political events

- nature and scope of actions by stakeholders and/or the general public

Many of these and other similar factors are beyond the control of
Petro-Canada. Petro-Canada discusses these factors in greater detail in
filings with the Canadian provincial securities commissions and the U.S.
Securities and Exchange Commission (SEC).

Readers are cautioned that this list of important factors affecting
forward-looking information is not exhaustive. Furthermore, the
forward-looking information in this news release is made as of October
23, 2008 and, except as required by applicable law, will not be publicly
updated or revised. This cautionary statement expressly qualifies the
forward-looking information in this news release.

Petro-Canada disclosure of reserves

Petro-Canada's qualified reserves evaluators prepare the reserves
estimates the Company uses. The Canadian provincial securities
commissions do not consider Petro-Canada's reserves staff and management
as independent of the Company. Petro-Canada has obtained an exemption
from certain Canadian reserves disclosure requirements that allows
Petro-Canada to make disclosure in accordance with SEC standards where
noted in this news release. This exemption allows comparisons with U.S.
and other international issuers.

As a result, Petro-Canada formally discloses its proved reserves data
using U.S. requirements and practices, and these may differ from Canadian
domestic standards and practices. The use of the terms such as
"probable," "possible," "resources" and "life-of-field production" in
this news release does not meet the SEC guidelines for SEC filings. To
disclose reserves in SEC filings, oil and natural gas companies must
prove they are economically and legally producible under existing
economic and operating conditions. Note that when the term barrel of oil
equivalent (boe) is used in this news release, it may be misleading,
particularly if used in isolation. A boe conversion ratio of six Mcf to
one bbl is based on an energy equivalency conversion method. This method
primarily applies at the burner tip and does not represent a value
equivalency at the wellhead.

The table below describes the industry definitions that Petro-Canada
currently uses:

----------------------------------------------------------------------------
Definitions Petro-Canada uses Reference
----------------------------------------------------------------------------
Proved oil and natural gas reserves SEC reserves definition (Accounting
(includes both proved developed Rules Regulation S-X 210.4-10,
and proved undeveloped) U.S. Financial Accounting Standards
Board (FASB) Statement No. 69)

SEC Guide 7 for Oilsands Mining

Unproved reserves, probable and Canadian Securities Administrators:
possible reserves Canadian Oil and Gas Evaluation
(COGE) Handbook, Vol. 1 Section 5
prepared by the Society of
Petroleum Evaluation Engineers (SPEE)
and the Canadian Institute of
Mining Metallurgy and Petroleum (CIM)

Contingent and Prospective Petroleum Resources Management System:
Resources Society of Petroleum Engineers, SPEE,
World Petroleum Congress and American
Association of Petroleum Geologist
definitions (approved March 2007)

Canadian Securities Administrators:
COGE Handbook Vol. 1 Section 5
----------------------------------------------------------------------------

Although the Society of Petroleum Engineers resource classification
has categories of 1C, 2C, 3C for Contingent Resources, and low, best and
high estimates for Prospective Resources, Petro-Canada will only refer to
the 2C for Contingent Resources and the risked (an assessment of the
probability of discovering the resources) best estimate for Prospective
Resources when referencing resources in this news release. Canadian Oil
Sands represents approximately 71% of Petro-Canada's total for Contingent
and Prospective Resources. The balance of Petro-Canada's resources is
spread out across the business, most notably in the North American
frontier and International areas. Also, when Petro-Canada references
resources for the Company, Contingent Resources are approximately 53% and
risked Prospective Resources are approximately 47% of the Company's total
resources.

Cautionary statement: In the case of discovered resources or a
subcategory of discovered resources other than reserves, there is no
certainty that it will be commercially viable to produce any portion of
the resources. In the case of undiscovered resources or a subcategory of
undiscovered resources, there is no certainty that any portion of the
resources will be discovered. If discovered, there is no certainty that
it will be commercially viable to produce any portion of the resources.

For movement of resources to reserves categories, all projects must have
an economic depletion plan and may require

- additional delineation drilling and/or new technology for oil sands
mining, in situ and conventional Contingent and risked Prospective
Resources prior to project sanction and regulatory approvals; and

- exploration success with respect to conventional risked Prospective
Resources prior to project sanction and regulatory approvals.

Reserves and resources information contained in this news release is as
at December 31, 2007.

Contacts:
Investor and analyst inquiries:
Ken Hall, Investor Relations
Petro-Canada, Calgary
(403) 296-7859
Email: investor@petro-canada.ca

Lisa McMahon, Investor Relations
Petro-Canada, Calgary
(403) 296-3764
Email: investor@petro-canada.ca

Media and general inquiries:
Andrea Ranson, Corporate Communications
Petro-Canada, Calgary
(403) 296-4610
Email: corpcomm@petro-canada.ca
Website: www.petro-canada.ca

Copyright 2008, Market Wire, All rights reserved.

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