CALGARY, Nov. 1 /CNW/ -- CALGARY, Nov. 1 /CNW/ -
-------------------- -------------------- Third quarter Nine months
(millions of dollars, -------------------- --------------------
unless noted) 2010 2009 % 2010 2009 %
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Net income (U.S. GAAP) 418 547 (24) 1,411 1,045 35 Net income per
common share - assuming dilution (dollars) 0.49 0.64 (23) 1.65 1.22
35 Capital and exploration expenditures 1,199 575 109 2,980 1,604
86 Bruce March, chairman, president and chief executive officer of
Imperial Oil, commented: "Imperial Oil achieved solid results with
third quarter earnings of $418 million or $0.49 per share. Our
earnings were down from $547 million in the third quarter of 2009
due to lower upstream volumes primarily from a planned downtime at
Syncrude, unfavourable foreign exchange effects of a stronger
Canadian dollar, and third-party pipeline reliability issues that
negatively impacted heavy crude oil industry sales and
realizations. Strong operating performance in downstream business
segments offset continued weak industry margins. Earnings for the
first nine months of 2010 were $1,411 million or $1.65 per share,
up from $1,045 million in the first nine months of 2009, an
increase of 35 percent. Imperial Oil's proven approach of taking a
long-term view and focusing on disciplined capital investment and
financial management will continue to reward our shareholders.
Strong cash flow from operating activities continued to
substantially fund our record capital investment program. Capital
and exploration expenditures were $1,199 million in the third
quarter, about double the third quarter of 2009. These expenditures
were directed primarily to the development of our Kearl oil sands
company growth project."
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Imperial Oil is one of Canada's largest corporations and a leading
member of the country's petroleum industry. The company is a major
producer of crude oil and natural gas, Canada's largest petroleum
refiner and a leading marketer with a coast-to-coast supply network
that includes about 1,850 retail service stations. Third quarter
items of interest - Net income was $418 million, compared with $547
million for the third quarter of 2009, a decrease of 24% or $129
million. - Net income per common share was $0.49, a decrease of 23%
from the third quarter of 2009. - Cash generated from operating
activities was $965 million, compared with $698 million in the same
period last year. - Capital and exploration expenditures were
$1,199 million, up 109% from the third quarter of 2009, supporting
the Kearl oil sands and other growth projects. - Gross
oil-equivalent barrels of production averaged 281,000 barrels a
day, compared with 304,000 barrels a day in the same period last
year. Lower production volumes in the third quarter were primarily
due to planned maintenance activities at Syncrude and the cyclic
nature of production at Cold Lake. - Kearl oil sands project
update: - The company is currently reconfiguring its Kearl project
development plan to include a combination of debottlenecking and
expansion to minimize facility requirements and to reduce the plant
footprint. The approach will leverage our execution learnings, take
advantage of the investments in infrastructure that would not need
to be duplicated in the future and will utilize our successful
"design one, build many" approach to replicate facilities. The
overall production profile and total resource developed at Kearl
remain relatively unchanged for the reconfigured project. It is
expected that the capital investments' spending profile of the
first phase of the project will be higher based on the adjustments
mentioned above. - The Kearl project's tailings management plan was
approved by Alberta's Energy Resources Conservation Board (ERCB) on
August 11, 2010. - Nabiye project update - The regulatory approval
process for Imperial's Nabiye expansion project advanced with the
recent ERCB Cold Lake scheme amendment and Alberta Utilities
Commission approvals. The expansion will add new producing well
pads, a processing plant, cogeneration facilities and about 30,000
barrels a day to Cold Lake's production. Current activities include
plant site clearing, grading and road construction. - Horn River
update - Imperial is planning to drill a horizontal multi- well pad
pilot development to evaluate longer-term well productivity this
winter season. The company also added an additional 11,000 acres,
bringing its joint venture holdings to 321,000 net acres - one of
industry's largest acreage positions in the area. - Beaufort Sea -
Imperial and ExxonMobil Canada signed a joint operator agreement
with BP to share exploration and potential development work on
their exploration licenses in the Beaufort Sea. Imperial or
ExxonMobil Canada will be the operator and further exploration
activities will only proceed with proper regulatory approval. - Tim
Hortons alliance - Imperial Oil and Tim Hortons signed a 10-year
agreement to extend their existing alliance. The agreement includes
a commitment to add 175 Tim Hortons locations at Esso sites across
Canada over the next 10 years. Tim Hortons began opening kiosks
inside Esso gas stations in 1994 and there are now more than 350 of
these sites across Canada. Third quarter 2010 vs. third quarter
2009 The company's net income for the third quarter of 2010 was
$418 million or $0.49 a share on a diluted basis, compared with
$547 million or $0.64 a share for the same period last year.
Although third quarter earnings were lower, underlying business
operations remained strong across all segments of the company. The
lower third quarter earnings were primarily attributable to planned
maintenance activities at Syncrude, impacting earnings by about $90
million, and the unfavourable foreign exchange effects of a
stronger Canadian dollar of about $70 million. These factors were
partially offset by the combined impacts of upstream commodity
prices and downstream margins totaling about $75 million. The
company estimates that third-party pipeline reliability issues
negatively impacted third quarter earnings by about $60 million;
this effect, which will carry-over in fourth quarter results, has
been reflected in the overall commodity price and margins factor
above. Upstream net income in the third quarter was $348 million
versus $439 million in the same period of 2009. Earnings decreased
primarily due to higher costs and lower volumes at Syncrude, mainly
a result of planned maintenance activities, totaling about $90
million. Earnings were also negatively impacted by the unfavourable
foreign exchange effects of a stronger Canadian dollar of about $65
million and lower Cold Lake bitumen production and lower
conventional volumes totaling about $25 million. These factors were
partially offset by higher crude oil and natural gas commodity
prices in the third quarter of 2010 which contributed to higher
earnings of about $95 million. Third-party pipeline reliability
issues in the third quarter negatively impacted the transportation
of western crude oil. The company estimates the negative impact on
earnings of about $45 million from lower realizations, the effect
of which has been reflected in the commodity price factor above.
The average price of Brent crude oil in U.S. dollars, a common
benchmark for world oil markets, was $76.85 a barrel in the third
quarter, up about 13 percent from the corresponding period last
year. The company's average realizations on sales of Canadian
conventional crude oil and synthetic crude oil from Syncrude
production also increased. The company's average bitumen
realizations were also higher in the third quarter, but by less
than the relative increase in light crude oil prices, reflecting a
widened price spread between the lighter crude oils and Cold Lake
bitumen, attributable to third-party pipeline outages. Gross
production of Cold Lake bitumen averaged 139 thousand barrels a day
during the third quarter, versus 145 thousand barrels in the same
quarter last year. Lower volumes were due to the cyclic nature of
production at Cold Lake. The company's share of Syncrude's gross
production in the third quarter was 66 thousand barrels a day,
versus 78 thousand barrels in the third quarter of 2009. Lower
volumes were the result of planned maintenance activities, which
began in September 2010 and will complete in late October 2010.
Gross production of conventional crude oil averaged 22 thousand
barrels a day in the third quarter, down from 25 thousand barrels
in the third quarter of 2009. Planned maintenance activities at the
Norman Wells field and natural reservoir decline were the main
contributors to the lower production. Gross production of natural
gas during the third quarter of 2010 was 284 million cubic feet a
day, down slightly from 291 million cubic feet in the same period
last year. The lower production volume was primarily a result of
maintenance activities and natural reservoir decline. Downstream
net income was $69 million in the third quarter of 2010, compared
with $62 million in the same period a year ago. Improved refinery
operations as well as improved sales volumes when compared to the
low levels in the third quarter of 2009 contributed about $25
million to the earnings increase. These factors were partially
offset by lower overall margins of about $20 million, which
included the negative impact of the third-party pipeline outages.
Chemical net income was $23 million in the third quarter, $4
million higher than the same quarter last year. Improved industry
margins for polyethylene and intermediate products were partially
offset by lower sales volumes for polyethylene products. Net income
effects from Corporate and other were negative $22 million in the
third quarter, compared with $27 million in the same period of
2009. The change in earnings effects was primarily due to changes
in share-based compensation charges in the third quarter of 2010.
Cash flow generated from operating activities was $965 million
during the third quarter of 2010, compared with $698 million in the
same period last year. Higher cash flow was primarily driven by
working capital effects partially offset by lower earnings.
Investing activities used net cash of $1,113 million in the third
quarter, an increase of $568 million from the corresponding period
in 2009. Capital and exploration expenditures were $1,199 million
in the third quarter, compared with $575 million during the same
quarter 2009. Expenditures during the quarter were primarily
directed towards the advancement of the Kearl oil sands project.
Other investments included development drilling at Cold Lake,
exploration drilling at Horn River as well as environmental and
other projects at Syncrude. In the third quarter, the company
increased its debt level by $228 million by drawing on existing
facilities. The company's balance of cash was $51 million at
September 30, 2010, compared with $513 million at the end of 2009.
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Nine months highlights - Net income was $1,411 million, up from
$1,045 million in the nine months of 2009. - Net income per common
share increased to $1.65 compared to $1.22 in the same period of
2009. - Cash generated from operations was $2,203 million, versus
$664 million in the nine months of 2009. - Capital and exploration
expenditures were $2,980 million, up 86 percent, supporting the
Kearl oil sands and other growth projects. - Gross oil-equivalent
barrels of production averaged 291 thousands of barrels per day,
compared to 292 thousands of barrels per day in the nine months of
2009. - Per-share dividends declared in the first three quarters of
2010 totaled $0.32, up from $0.30 in the same period of 2009.
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Nine months 2010 vs. nine months 2009 Net income for the first nine
months of 2010 was $1,411 million or $1.65 a share on a diluted
basis, versus $1,045 million or $1.22 a share for the nine months
of 2009. For the nine months, earnings increased primarily due to
the impacts of higher upstream commodity prices of about $800
million, higher Syncrude volumes of about $90 million and improved
refinery operations and lower refinery maintenance activities
totaling about $75 million. These factors were partially offset by
the unfavourable effects of a stronger Canadian dollar of about
$330 million, higher royalty costs due to higher commodity prices
of about $240 million, and lower overall downstream margins of
about $110 million. Earnings in the nine months of 2010 also
included higher gain of about $25 million from sale of
non-operating assets. Upstream net income for the nine months was
$1,238 million versus $833 million during the same period last
year. Higher crude oil and natural gas commodity prices in 2010
increased revenues, contributing to higher earnings of about $800
million. Earnings were also positively impacted by higher Syncrude
volumes, reflecting improved reliability, of about $90 million.
These factors were partially offset by the impact of a stronger
Canadian dollar of about $265 million and higher royalty costs due
to higher commodity prices of about $240 million. The average price
of Brent crude oil in U.S. dollars, a common benchmark for world
oil markets, was $77.15 a barrel in the nine months of 2010, up
about 35 percent from the corresponding period last year. The
company's average realizations on sales of Canadian conventional
crude oil and synthetic crude oil from Syncrude production also
increased. The company's average bitumen realizations were also
higher in the first nine months of 2010, but by less than the
relative increase in light crude oil prices, reflecting widened
price spread between the lighter crude oils and Cold Lake bitumen,
attributable to third-party pipeline outages. For the nine months,
gross production of Cold Lake bitumen was 143 thousand barrels a
day this year, compared with 144 thousand barrels in the same
period of 2009. During the nine months of the year, the company's
share of gross production from Syncrude averaged 71 thousand
barrels a day, up from 66 thousand barrels in 2009. Increased
production in the nine months of 2010 was due to improved
operational reliability. Gross production of conventional crude oil
in the first nine months of the year was 23 thousand barrels a day,
compared with 25 thousand barrels in 2009. Planned maintenance
activities at the Norman Wells field and natural reservoir decline
were the main contributors to the lower production. In the nine
months of the year, gross production of natural gas was 282 million
cubic feet a day, down from 294 million cubic feet in the nine
months of 2009. The lower production volume was primarily a result
of maintenance activities and natural reservoir decline. Nine-month
net income from Downstream was $176 million, compared with $226
million in 2009. Lower earnings were primarily due to lower overall
margins of about $110 million and the unfavourable effects of a
stronger Canadian dollar of about $60 million. These factors were
partially offset by the favourable impacts of about $75 million
associated with improved refinery operations and lower refinery
maintenance activities and $35 million gain from sale of
non-operating assets. Chemical net income for the first nine months
was $44 million, up $14 million from the same period in 2009.
Improved industry margins were partially offset by lower sales
volumes for polyethylene products and higher costs due to planned
maintenance activities. For the nine months of 2010, net income
from Corporate and other was negative $47 million, in line with
negative $44 million reported last year. Key financial and
operating data follow. Forward-Looking Statements Statements in
this report relating to future plans, projections, events or
conditions are forward-looking statements. Actual future results,
including project plans, costs, timing and capacities; financing
sources; the resolution of contingencies and uncertain tax
positions; the effect of changes in prices and other market
conditions; and environmental and capital expenditures could differ
materially depending on a number of factors, such as the outcome of
commercial negotiations; changes in the supply of and demand for
crude oil, natural gas, and petroleum and petrochemical products;
political or regulatory events; and other factors discussed in Item
1A of the company's 2010 Form 10K. IMPERIAL OIL LIMITED THIRD
QUARTER 2010
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millions of Canadian dollars, Third Quarter Nine Months unless
noted 2010 2009 2010 2009
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Net income (U.S. GAAP) Total revenues and other income 5,851 5,561
18,156 15,534 Total expenses 5,283 4,802 16,255 14,079
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Income before income taxes 568 759 1,901 1,455 Income taxes 150 212
490 410
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Net income 418 547 1,411 1,045 Net income per common share
(dollars) 0.49 0.64 1.66 1.23 Net income per common share -
assuming dilution (dollars) 0.49 0.64 1.65 1.22 Gain/(loss) on
asset sales, after tax 10 - 50 26 Total assets at September 30
19,398 16,822 Total debt at September 30 457 140 Interest coverage
ratio - earnings basis (rolling 4 quarters, times covered) 331.8
248.3 Other long-term obligations at September 30 2,443 2,219
Shareholders' equity at September 30 10,746 9,410 Capital employed
at September 30 11,238 9,587 Return on average capital employed (a)
(rolling 4 quarters, percent) 18.7 18.5 Dividends on common stock
Total 93 85 178 255 Per common share (dollars) 0.11 0.10 0.32 0.30
Millions of common shares outstanding At September 30 847.6 847.6
Average - assuming dilution 854.7 854.9 854.5 857.5
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(a) Return on capital employed is net income excluding after-tax
cost of financing divided by the average rolling four quarters'
capital employed. IMPERIAL OIL LIMITED THIRD QUARTER 2010
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Third Quarter Nine Months millions of Canadian dollars 2010 2009
2010 2009
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Total cash and cash equivalents at period end 51 458 51 458 Net
income 418 547 1,411 1,045 Adjustment for non-cash items:
Depreciation and depletion 187 194 561 584 (Gain)/loss on asset
sales (12) - (58) (32) Deferred income taxes and other (17) (6) 55
(49) Changes in operating assets and liabilities 389 (a) (37) 234
(a) (884)
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Cash from (used in) operating activities 965 698 2,203 664
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Cash from (used in) investing activities (1,113) (545) (2,717)
(1,431) Proceeds from asset sales 35 8 95 45 Cash from (used in)
financing activities 135 (85) 52 (749)
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(a) Third quarter and the first nine months of 2010 cash flow from
operating activities were positively impacted by the timing of
scheduled income tax payments and other working capital effects.
IMPERIAL OIL LIMITED THIRD QUARTER 2010
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Third Quarter Nine Months millions of Canadian dollars 2010 2009
2010 2009
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Net income (U.S. GAAP) Upstream 348 439 1,238 833 Downstream 69 62
176 226 Chemical 23 19 44 30 Corporate and other (22) 27 (47) (44)
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Net income 418 547 1,411 1,045
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Total revenues Upstream 1,792 1,878 5,985 4,894 Downstream 5,088
4,749 15,592 13,362 Chemical 344 315 1,028 900 Eliminations/Other
(1,373) (1,381) (4,449) (3,622)
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Revenues 5,851 5,561 18,156 15,534
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Purchases of crude oil and products Upstream 545 568 1,985 1,400
Downstream 4,047 3,729 12,471 10,162 Chemical 244 218 754 650
Eliminations (1,374) (1,389) (4,451) (3,635)
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Purchases of crude oil and products 3,462 3,126 10,759 8,577
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Production and manufacturing expenses Upstream 592 549 1,767 1,825
Downstream 320 313 1,079 1,049 Chemical 49 47 157 142
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Production and manufacturing expenses 961 909 3,003 3,016
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Capital and exploration expenditures Upstream 1,151 504 2,838 1,422
Downstream 45 64 129 167 Chemical 1 6 9 12 Corporate and other 2 1
4 3
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Capital and exploration expenditures 1,199 575 2,980 1,604
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Exploration expenses charged to income included above 54 21 171 126
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IMPERIAL OIL LIMITED THIRD QUARTER 2010
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Operating statistics Third Quarter Nine Months 2010 2009 2010 2009
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Gross crude oil and Natural Gas Liquids (NGL) production (thousands
of barrels a day) Cold Lake 139 145 143 144 Syncrude 66 78 71 66
Conventional 22 25 23 25
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Total crude oil production 227 248 237 235 NGLs available for sale
7 7 7 8
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Total crude oil and NGL production 234 255 244 243
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Gross natural gas production (millions of cubic feet a day) 284 291
282 294 Gross oil-equivalent production (a) (thousands of
oil-equivalent barrels a day) 281 304 291 292 Net crude oil and NGL
production (thousands of barrels a day) Cold Lake 112 116 114 124
Syncrude 61 67 65 62 Conventional 17 19 17 21
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Total crude oil production 190 202 196 207 NGLs available for sale
5 6 5 6
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Total crude oil and NGL production 195 208 201 213
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Net natural gas production (millions of cubic feet a day) 263 295
255 278 Net oil-equivalent production (a) (thousands of
oil-equivalent barrels a day) 239 257 244 259 Cold Lake blend sales
(thousands of barrels a day) 176 185 187 187 NGL Sales (thousands
of barrels a day) 13 9 11 9 Natural gas sales (millions of cubic
feet a day) 259 269 262 270 Average realizations (Canadian dollars)
Conventional crude oil real- izations (a barrel) 67.93 65.29 70.76
57.30 NGL realizations (a barrel) 44.22 36.24 48.15 38.14 Natural
gas realizations (a thousand cubic feet) 3.58 2.90 4.19 4.07
Synthetic oil realizations (a barrel) 77.83 73.27 79.26 65.95
Bitumen realizations (a barrel) 57.04 55.97 58.17 49.31 Refinery
throughput (thousands of barrels a day) 453 417 437 414 Refinery
capacity utilization (percent) 90 83 87 82 Petroleum product sales
(thousands of barrels a day) Gasolines 227 204 215 200 Heating,
diesel and jet fuels 151 138 145 143 Heavy fuel oils 20 22 28 26
Lube oils and other products 46 43 44 39
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Net petroleum products sales 444 407 432 408
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Petrochemical Sales (thousands of tonnes a day) 2.7 2.8 2.7 2.8
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(a) Gas converted to oil-equivalent at 6 million cubic feet = 1
thousand barrels IMPERIAL OIL LIMITED THIRD QUARTER 2010
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Net income Net income (U.S. GAAP) per common share (millions of
Canadian dollars) (dollars)
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2006 First Quarter 591 0.60 Second Quarter 837 0.85 Third Quarter
822 0.84 Fourth Quarter 794 0.83
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Year 3,044 3.12
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2007 First Quarter 774 0.82 Second Quarter 712 0.76 Third Quarter
816 0.88 Fourth Quarter 886 0.97
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Year 3,188 3.43
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2008 First Quarter 681 0.76 Second Quarter 1,148 1.29 Third Quarter
1,389 1.57 Fourth Quarter 660 0.77
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Year 3,878 4.39
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2009 First Quarter 289 0.34 Second Quarter 209 0.25 Third Quarter
547 0.64 Fourth Quarter 534 0.63
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Year 1,579 1.86
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2010 First Quarter 476 0.56 Second Quarter 517 0.61 Third Quarter
418 0.49
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To view the graph "Factors affecting net income", please visit
http://files.newswire.ca/832/EssoQ3graph.jpg Pius Rolheiser
403-237-2710
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