	canada oil industry set for recovery analysts firmer  oil prices government aid packages and corporate spending cuts will help canada s oil industry recover from last year sharp downturn industry analysts said they said there will be significant earnings gains in compared to last year s dismal results when oil prices dropped about pct on canada s stock exchanges energy shares have soared to their highest levels since with many issues trading at record highs this is reflecting a tremendous amount of optimism on the part of the investment community that the outlook for the industry for the future is extremely attractive peters and co ltd oil analyst wilf gobert said financial statements from canada s major oil companies culminating with dome petroleum ltd s billion canadian dlr loss reported this week painted a bleak picture of last year s results analysts said but the financial statements are a snap shot and a recording of history the stock market is the indication of the future gobert commented the toronto stock exchange s oil and gas index of companies is up to so far in trading today from at the end of among canada s largest oil companies class a shares of imperial oil ltd imo a pct owned by exxon corp xon is trading at up from a week low of shell canada ltd pct owned by royal dutch shell group is at up from a low during the last year of texaco canada inc txc pct owned by texaco inc tx is at up from a low of levesque beaubien inc oil analyst robert plexman forecasts operating profit for of canada s largest oil and gas companies will rise pct in to about billion dlrs and operating cash flow will increase pct to billion dlrs based on an average oil price for the year of u s dlrs a barrel however if prices hold about u s dlrs a barrel net operating income could show a pct increase with cash flow pct higher analyst plexman said although it is difficult to forecast the extent of the profit improvement this year the gain should be significant he added those improvements follow a sharp downturn in when operating income for the ten companies dropped pct to billion dlrs and operating cash flow fell pct to billion dlrs but one industry source doesn t think oil prices will hold recent gains and more government assistance is needed canadian petroleum association technical director hans maciej sees industry cash flow falling another pct in after dipping about pct last year maciej said he sees  oil supply outweighing demand and doesn t believe a recent opec production accord will continue to support prices however several companies share the optimistic industry outlook expressed by a majority of analysts shell canada and norcen energy resources ltd forecast improved earnings in their annual reports issued this week assuming oil prices remain at or above levels the industry s outlook for is positive but not robust texaco canada said in its annual report while oil prices have strengthened somewhat and there is good reason to believe that the general level is sustainable continued volatility is likely texaco canada added in the face of short term uncertainty many companies have pared spending plans from last year s lower levels deferring most frontier exploration work the industry is becoming very selective in investments very conservative and cautious which is not unexpected canadian petroleum association s maciej said federal and alberta goverment aid measures helped cushion the industry downturn in and are improving results the most significant help came last september when the federal government lifted the pct petroleum gas revenue tax pgrt months earlier then planned analysts estimate the tax relief will save larger oil companies about billion dlrs by the end of the pgrt cut helped brake the steep profit and cash flow decline in for many oil companies and prevented further exploration spending cuts analysts said for a number of companies the pgrt cut was absolutely necessary to even maintain the kind of reduced investments that were made otherwise the reduction would have been considerably more maciej said reuter 
