Petro-Canada 3-month TSX chart

Petro-Canada reported a sharp drop in its second quarter earnings on Thursday.

The oil giant reported its second quarter net earnings at $77 million, or 15 cents a share, down from $1.5 billion, or $3.10, a year ago.

In a statement, Calgary-based Petro-Canada said a "difficult business environment" — including oil prices — was responsible for the drop.

But Petro-Canada CEO Ron Brenneman said the company has managed itself well ahead of its merger with Suncor Energy Inc., which takes effect on Aug. 1.

"We continued to manage our business in a prudent manner during the second quarter, as the downturn persisted," Brenneman said. "Staying the course we charted for ourselves at the beginning of this year has us in a strong position heading into our merger with Suncor."

As a result of the merger, the largest in Canadian history, Petro-Canada will not be declaring further dividends.

During Petro-Canada's final independent conference call with analysts, Brenneman said the merged company is reducing its staff as it works out areas of overlap.

"Our focus is more on working our way down through the various levels in the organization and trying to get to people as quickly as we can and provide some certainty about where their future lies," he said. "We'll start with the CEO. We only need one CEO, so that's a 50 per cent redundancy, and it kind of works its way down through the various levels."

Rick George, CEO of Suncor, will assume that role in the merged company, while Brenneman will become executive vice-chairman.

Brenneman did not give an overall number of how many jobs will be eliminated. The Calgary Herald reported that about 50 Petro-Canada executives face layoff as the Aug. 1 merger date nears.

With files from The Canadian Press