Imperial Oil Limited (TSX:IMO):
- Net income of $424 million; cash generated from operations of
nearly $1.4 billion
- Highest third quarter production in 30 years at 407,000 gross
oil-equivalent barrels per day
- Returned $512 million to shareholders through share purchases
and dividends
Third quarter
Nine months
millions of Canadian dollars, unless
noted
2019
2018
∆
2019
2018
∆
Net income (loss) (U.S. GAAP)
424
749
-325
1,929
1,461
+468
Net income (loss) per common share,
assuming dilution (dollars)
0.56
0.94
-0.38
2.51
1.79
+0.72
Capital and exploration expenditures
442
376
+66
1,400
934
+466
Estimated net income in the third quarter of 2019 was $424
million, compared to net income of $749 million in the same period
of 2018. Cash generated from operating activities for the third
quarter totalled nearly $1.4 billion, up from $1.2 billion
generated in the third quarter of 2018.
Overall upstream gross oil-equivalent production averaged
407,000 barrels per day, up from 393,000 barrels per day in the
third quarter of 2018. Gross production at Kearl averaged 224,000
barrels per day in the third quarter, with production for the first
nine months of the year averaging 204,000 barrels per day.
“Imperial achieved its highest third quarter production in 30
years,” said Rich Kruger, chairman and chief executive officer.
“This performance demonstrates the results of the company’s focus
on upstream reliability.”
Refinery throughput averaged 363,000 barrels per day, compared
to 388,000 barrels per day in the third quarter of 2018. Petroleum
product sales averaged 488,000 barrels per day in the third
quarter, compared to 516,000 barrels per day in the same period of
2018. Downstream volumes were affected by the planned Nanticoke
refinery turnaround and ongoing impacts from the fractionation
tower incident at Sarnia earlier in the year.
“Imperial continued to deliver strong cash flow in the third
quarter, despite executing significant maintenance activities.
Year-to-date cash generated from operations totalled $3.4 billion,
supporting the company’s ability to fund its investment priorities
and also return surplus cash to shareholders. During the first nine
months of 2019, over $1.5 billion was returned to shareholders
through dividends and share purchases,” said Kruger.
As previously announced, chairman and chief executive officer
Rich Kruger declared his plans to retire at the end of December
2019 and Imperial’s board of directors announced the appointment of
Brad Corson as president and a director on September 17. Mr. Corson
will assume the additional roles of chairman and chief executive
officer on January 1, 2020. “Imperial’s people and assets provide a
solid foundation for continued growth and leadership within the
Canadian energy industry,” said Corson. “I look forward to building
on these strengths to deliver long-term shareholder value.”
Third quarter highlights
- Net income of $424 million or $0.56 per share on a diluted
basis, compared to net income of $749 million or $0.94 per
share in the third quarter of 2018.
- Cash generated from operating activities was $1,376
million, up from $1,207 million in the third quarter of
2018.
- Capital and exploration expenditures totalled $442
million, compared with $376 million in the third quarter of
2018. Total capital expenditures for the year continue to be
anticipated at between $1.8 billion and $1.9 billion.
- Dividends paid and share purchases totalled $512 million in
the third quarter of 2019. The company paid dividends of $169
million or $0.22 per share, and purchased about 9.8 million shares
for $343 million.
- Production averaged 407,000 gross oil-equivalent barrels per
day, up from 393,000 barrels per day in the same period of
2018.
- Gross production of Kearl bitumen averaged 224,000 barrels
per day (159,000 barrels Imperial’s share), compared to 244,000
barrels per day (173,000 barrels Imperial’s share) in the third
quarter of 2018. A planned turnaround on one of the asset’s two
plants began in early-September and was completed in mid-October,
impacting gross production in the quarter by an estimated 34,000
barrels per day (24,000 barrels Imperial’s share).
- Gross production of Cold Lake bitumen averaged 142,000
barrels per day, compared to 150,000 barrels per day in the
same period of 2018.
- The company’s share of gross production from Syncrude
averaged 69,000 barrels per day, up from 45,000 barrels per day
in the same period of 2018. The increase was mainly due to the
absence of impacts from the 2018 power disruption, partially offset
by an ongoing 75-day planned turnaround which began in late-August.
The turnaround impacted the company’s share of gross production in
the quarter by an estimated 15,000 barrels per day.
- Crude-by-rail shipments averaged 52,000 barrels per day in
the third quarter, compared to 64,000 barrels per day in the
second quarter of 2019.
- Refinery throughput averaged 363,000 barrels per
day,compared to 388,000 barrels per day in the third quarter of
2018. Capacity utilization was 86 percent, compared to 92 percent
in the third quarter of 2018. The results reflect a planned
turnaround at the Nanticoke refinery which began in September and
is anticipated to be complete in November, as well as ongoing
impacts from the fractionation tower incident at Sarnia which
occurred earlier this year.
- Petroleum product sales were 488,000 barrels per
day,compared to 516,000 barrels per day in the third quarter of
2018. Lower volumes were mainly due to reduced refining
throughput.
- Speedpass+TM mobile app enhancement and promotion a
success. During this promotion, the number of users enrolled
increased by 50 percent. Speedpass+ users can now earn Esso Extra
or PC Optimum points when using the app at participating Esso and
Mobil stations nationwide.
- Imperial to enhance artificial intelligence
capabilities. Imperial announced plans to collaborate with the
Alberta Machine Intelligence Institute for progressing in-house
machine learning capabilities, which will develop more effective
ways to recover oil and gas resources, lower operating costs and
reduce environmental impacts.
Third quarter 2019 vs. third quarter 2018
The company’s net income for the third quarter of 2019 was $424
million or $0.56 per share on a diluted basis, compared to net
income of $749 million or $0.94 per share in the same period of
2018.
Upstream net income was $209 million in the third quarter,
compared to net income of $222 million in the same period of 2018.
Earnings decreased mainly due to higher operating expenses of about
$70 million and higher royalties of about $50 million, partially
offset by higher volumes of about $110 million primarily at
Syncrude.
West Texas Intermediate (WTI) averaged US$56.44 per barrel in
the third quarter of 2019, down from US$69.43 per barrel in the
same quarter of 2018. Western Canada Select (WCS) averaged US$44.21
per barrel and US$47.49 per barrel for the same periods. The WTI /
WCS differential narrowed during the third quarter of 2019 to
average approximately US$12 per barrel for the quarter, compared to
around US$22 per barrel in the same period of 2018.
The Canadian dollar averaged US$0.76 in the third quarter of
2019, essentially unchanged from the third quarter of 2018.
Imperial’s average Canadian dollar realizations for bitumen
increased in the quarter supported primarily by lower diluent costs
partially offset by a decrease in WCS. Bitumen realizations
averaged $51.12 per barrel in the third quarter of 2019, up from
$50.42 per barrel in the third quarter of 2018. The company’s
average Canadian dollar realizations for synthetic crude declined
generally in line with WTI in the quarter, adjusted for changes in
exchange rates and transportation costs. Synthetic crude
realizations averaged $77.27 per barrel in the third quarter of
2019, compared to $89.70 per barrel in the same period of 2018.
Gross production of Cold Lake bitumen averaged 142,000 barrels
per day in the third quarter, compared to 150,000 barrels per day
in the same period of 2018.
Gross production of Kearl bitumen averaged 224,000 barrels per
day in the third quarter (159,000 barrels Imperial’s share),
compared to 244,000 barrels per day (173,000 barrels Imperial’s
share) in the third quarter of 2018. Lower production was mainly
due to timing of planned turnaround activity.
The company's share of gross production from Syncrude averaged
69,000 barrels per day, up from 45,000 barrels per day in the third
quarter of 2018. Higher production was mainly due to the absence of
production impacts from the 2018 power disruption, partially offset
by planned turnaround activity.
Downstream net income was $221 million in the third quarter,
compared to $502 million in the third quarter of 2018. Earnings
were negatively impacted by lower margins of about $230 million and
planned turnaround activity of about $70 million.
Refinery throughput averaged 363,000 barrels per day, compared
to 388,000 barrels per day in the third quarter of 2018. Capacity
utilization was 86 percent, compared to 92 percent in the third
quarter of 2018. Reduced throughput was mainly due to planned
turnaround activity at Nanticoke and ongoing impacts from the
fractionation tower incident at Sarnia which occurred earlier in
2019.
Petroleum product sales were 488,000 barrels per day, compared
to 516,000 barrels per day in the third quarter of 2018. Lower
petroleum product sales were mainly due to lower refinery
throughput.
Chemical net income was $38 million in the third quarter,
compared to $69 million from the same quarter of 2018, primarily
reflecting lower margins.
Corporate and other expenses were $44 million in the third
quarter, unchanged from the same period of 2018.
Cash flow generated from operating activities was $1,376 million
in the third quarter, up from $1,207 million in the corresponding
period in 2018, primarily reflecting favourable working capital
effects, partially offset by lower earnings.
Investing activities used net cash of $413 million in the third
quarter, compared with $352 million used in the same period of
2018.
Cash used in financing activities was $519 million in the third
quarter, compared with $580 million used in the third quarter of
2018. Dividends paid in the third quarter of 2019 were $169
million. The per share dividend paid in the third quarter was
$0.22, up from $0.19 in the same period of 2018. During the third
quarter, the company, under its share purchase program, purchased
about 9.8 million shares for $343 million, including shares
purchased from Exxon Mobil Corporation. In the third quarter of
2018, the company purchased about 10 million shares for $418
million.
The company’s cash balance was $1,531 million at September 30,
2019, versus $1,148 million at the end of third quarter 2018.
The company currently anticipates exercising its share purchases
uniformly over the duration of the program. Purchase plans may be
modified at any time without prior notice.
Nine months highlights
- Net income of $1,929 million, up from net income of $1,461
million in 2018.
- Net income per share on a diluted basis was $2.51, up from net
income per share of $1.79 in 2018.
- Cash flow generated from operating activities was $3,405
million, up from $3,051 million in 2018.
- Gross oil-equivalent production averaged 398,000 barrels per
day, up from 367,000 barrels per day in 2018.
- Refinery throughput averaged 363,000 barrels per day, compared
to 386,000 barrels per day in 2018.
- Petroleum product sales were 481,000 barrels per day, compared
to 503,000 barrels per day in 2018.
- Per share dividends declared during the year totalled $0.63, up
from $0.54 per share in 2018.
- Returned over $1.5 billion to shareholders through share
purchases and dividends.
Nine months 2019 vs. nine months 2018
Net income in the first nine months of 2019 was $1,929 million,
or $2.51 per share on a diluted basis, up from net income of $1,461
million or $1.79 per share in the first nine months of 2018. 2019
results include a favourable impact, largely non-cash, of $662
million associated with the Alberta corporate income tax rate
decrease. On June 28, 2019, the Alberta government enacted a 4
percent decrease in the provincial tax rate, from 12 percent to 8
percent by 2022.
Upstream net income was $1,252 million for the first nine months
of the year, reflecting the favourable impact associated with the
decreased Alberta corporate income tax rate of $689 million.
Excluding this impact, 2019 net income was $563 million, up from
net income of $172 million in the same period of 2018. Improved
results reflect higher volumes of about $530 million at Syncrude,
Kearl and Norman Wells, as well as the impact of higher crude oil
realizations of about $220 million and favourable foreign exchange
impacts of about $90 million. Results were negatively impacted by
higher operating expenses of about $270 million, higher royalties
of about $130 million, and lower Cold Lake volumes of about $70
million.
West Texas Intermediate averaged US$57.10 per barrel in the
first nine months of 2019, down from US$66.77 per barrel in the
same period of 2018. Western Canada Select averaged US$45.32 per
barrel and US$44.98 per barrel for the same periods. The WTI / WCS
differential narrowed to average approximately US$12 per barrel in
the first nine months of 2019, from around US$22 per barrel in the
same period of 2018.
The Canadian dollar averaged US$0.75 in the first nine months of
2019, a decrease of $0.03 from the same period in 2018.
Imperial's average Canadian dollar realizations for bitumen
increased in the first nine months of 2019, supported primarily by
lower diluent costs. Bitumen realizations averaged $52.44 per
barrel, up from $45.04 per barrel from the same period in 2018. The
company's average Canadian dollar realizations for synthetic crude
declined generally in line with WTI, adjusted for changes in
exchange rates and transportation costs. Synthetic crude
realizations averaged $74.59 per barrel, compared to $83.66 per
barrel from the same period in 2018.
Gross production of Cold Lake bitumen averaged 141,000 barrels
per day in the first nine months of 2019, compared to 145,000
barrels per day in the same period of 2018.
Gross production of Kearl bitumen averaged 204,000 barrels per
day in the first nine months of 2019 (145,000 barrels Imperial's
share), up from 202,000 barrels per day (144,000 barrels Imperial's
share) in the same period of 2018.
During the first nine months of 2019, the company's share of
gross production from Syncrude averaged 76,000 barrels per day, up
from 53,000 barrels per day in the same period of 2018. Higher
production was mainly due to the absence of production impacts from
the 2018 power disruption.
Downstream net income was $736 million for the first nine months
of 2019, compared to $1,224 million for the same period of 2018.
Earnings were negatively impacted by lower margins of about $430
million, reliability events of about $140 million, including the
fractionation tower incident at Sarnia, and lower sales volumes of
about $100 million. These factors were partially offset by lower
net turnaround impacts of about $80 million, and favourable foreign
exchange effects of about $60 million.
Refinery throughput averaged 363,000 barrels per day in the
first nine months of 2019, compared to 386,000 barrels per day in
the same period of 2018. Capacity utilization was 86 percent,
compared to 91 percent in the same period of 2018. Reduced
throughput was mainly due to higher planned turnaround activities
and impacts from the Sarnia fractionation tower incident.
Petroleum product sales were 481,000 barrels per day in the
first nine months of 2019, compared to 503,000 barrels per day in
the same period of 2018. Lower petroleum product sales were mainly
due to lower refinery throughput.
Chemical net income was $110 million in the first nine months of
2019, compared to $220 million in the same period of 2018,
primarily reflecting lower margins.
Corporate and other expenses were $169 million in the first nine
months of 2019, compared to $155 million in the same period of
2018.
Cash flow generated from operating activities was $3,405 million
in the first nine months of 2019, up from $3,051 million in the
same period of 2018, primarily reflecting favourable working
capital effects.
Investing activities used net cash of $1,305 million in the
first nine months of 2019, compared with $1,096 million used in
2018, primarily reflecting higher additions to property, plant and
equipment.
Cash used in financing activities was $1,557 million in the
first nine months of 2019, compared with $2,002 million used in the
same period of 2018. Dividends paid in the first nine months of
2019 were $465 million. The per share dividend paid in the first
nine months of 2019 was $0.60, up from $0.51 in the same period of
2018. During the first nine months of 2019, the company, under its
share purchase program, purchased about 29.6 million shares for
$1,072 million, including shares purchased from Exxon Mobil
Corporation. In the first nine months of 2018, the company
purchased about 38.5 million shares for $1,561 million.
Key financial and operating data follow.
Forward-looking statements
Statements of future events or conditions in this release,
including projections, targets, expectations, estimates, and
business plans are forward-looking statements. Forward-looking
statements can be identified by words such as believe, anticipate,
propose, plan, goal, target, estimate, expect, future, continue,
likely, may, should, will and similar references to future periods.
Disclosure related to capital expenditures for 2019; timing of
Nanticoke turnaround activities; the development, application and
impact of artificial intelligence technology; and the anticipated
purchases under the share purchase program constitute
forward-looking statements.
Forward-looking statements are based on the company's current
expectations, estimates, projections and assumptions at the time
the statements are made. Actual future financial and operating
results, including expectations and assumptions concerning demand
growth and energy source, supply and mix; commodity prices and
foreign exchange rates; production rates, growth and mix; project
plans, dates, costs, capacities and execution; production life and
resource recoveries; cost savings; applicable laws and government
policies; and capital and environmental expenditures could differ
materially depending on a number of factors. These factors include
changes in the supply of and demand for crude oil, natural gas, and
petroleum and petrochemical products and resulting price and margin
impacts; transportation for accessing markets; political or
regulatory events, including changes in law or government policy,
applicable royalty rates and tax laws; third party opposition to
operations and projects; environmental risks inherent in oil and
gas exploration and production activities; environmental
regulation, including climate change and greenhouse gas regulation
and changes to such regulation; currency exchange rates;
availability and allocation of capital; availability and
performance of third party service providers; unanticipated
operational disruptions; management effectiveness; project
management and schedules; response to technological developments;
operational hazards and risks; cybersecurity incidents; disaster
response preparedness; the ability to develop or acquire additional
reserves; and other factors discussed in Item 1A risk factors and
Item 7 management’s discussion and analysis of financial condition
and results of operations of Imperial Oil Limited’s most recent
annual report on Form 10-K.
Forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties, some
that are similar to other oil and gas companies and some that are
unique to Imperial. Imperial’s actual results may differ materially
from those expressed or implied by its forward-looking statements
and readers are cautioned not to place undue reliance on them.
Imperial undertakes no obligation to update any forward-looking
statements contained herein, except as required by applicable
law.
In this release all dollar amounts are expressed in Canadian
dollars unless otherwise stated. This release should be read in
conjunction with Imperial’s most recent Form 10-K. Note that
numbers may not add due to rounding.
The term “project” as used in this release can refer to a
variety of different activities and does not necessarily have the
same meaning as in any government payment transparency reports.
Attachment I
Third Quarter
Nine Months
millions of Canadian dollars, unless
noted
2019
2018
2019
2018
Net Income (loss) (U.S. GAAP)
Total revenues and other income
8,736
9,732
25,979
27,209
Total expenses
8,182
8,706
24,298
25,222
Income (loss) before income taxes
554
1,026
1,681
1,987
Income taxes
130
277
(248
)
526
Net income (loss)
424
749
1,929
1,461
Net income (loss) per common share
(dollars)
0.56
0.94
2.51
1.79
Net income (loss) per common share -
assuming dilution (dollars)
0.56
0.94
2.51
1.79
Other Financial Data
Gain (loss) on asset sales, after tax
25
6
31
21
Total assets at September 30
41,907
41,819
Total debt at September 30
5,161
5,188
Shareholders' equity at September 30
24,965
23,979
Capital employed at September 30
30,150
29,186
Dividends declared on common stock
Total
166
151
482
438
Per common share (dollars)
0.22
0.19
0.63
0.54
Millions of common shares outstanding
At September 30
752.9
792.7
Average - assuming dilution
760.3
800.5
770.0
816.9
Attachment II
Third Quarter
Nine Months
millions of Canadian dollars
2019
2018
2019
2018
Total cash and cash equivalents at
period end
1,531
1,148
1,531
1,148
Net income (loss)
424
749
1,929
1,461
Adjustments for non-cash items:
Depreciation and depletion
419
364
1,201
1,099
Impairment of intangible assets
-
46
-
46
(Gain) loss on asset sales
(28
)
(10
)
(34
)
(29
)
Deferred income taxes and other
116
276
(359
)
485
Changes in operating assets and
liabilities
445
(218
)
668
(11
)
Cash flows from (used in) operating
activities
1,376
1,207
3,405
3,051
Cash flows from (used in) investing
activities
(413
)
(352
)
(1,305
)
(1,096
)
Proceeds associated with asset sales
30
13
66
34
Cash flows from (used in) financing
activities
(519
)
(580
)
(1,557
)
(2,002
)
Attachment III
Third Quarter
Nine Months
millions of Canadian dollars
2019
2018
2019
2018
Net income (loss) (U.S. GAAP)
Upstream
209
222
1,252
172
Downstream
221
502
736
1,224
Chemical
38
69
110
220
Corporate and other
(44
)
(44
)
(169
)
(155
)
Net income (loss)
424
749
1,929
1,461
Revenues and other income
Upstream
3,105
3,262
10,000
8,880
Downstream
6,612
7,330
19,425
20,542
Chemical
298
408
935
1,187
Eliminations / Corporate and other
(1,279
)
(1,268
)
(4,381
)
(3,400
)
Revenues and other income
8,736
9,732
25,979
27,209
Purchases of crude oil and
products
Upstream
1,376
1,566
4,764
4,513
Downstream
5,142
5,567
15,062
15,664
Chemical
167
239
531
657
Eliminations
(1,286
)
(1,273
)
(4,401
)
(3,418
)
Purchases of crude oil and products
5,399
6,099
15,956
17,416
Production and manufacturing
expenses
Upstream
1,087
1,073
3,414
3,191
Downstream
460
356
1,315
1,212
Chemical
54
51
182
154
Eliminations
-
-
-
-
Production and manufacturing expenses
1,601
1,480
4,911
4,557
Capital and exploration
expenditures
Upstream
302
257
975
646
Downstream
124
105
364
250
Chemical
4
8
27
19
Corporate and other
12
6
34
19
Capital and exploration expenditures
442
376
1,400
934
Exploration expenses charged to income
included above
4
4
42
13
Attachment IV
Operating statistics
Third Quarter
Nine Months
2019
2018
2019
2018
Gross crude oil and natural gas liquids
(NGL) production
(thousands of barrels per day)
Cold Lake
142
150
141
145
Kearl
159
173
145
144
Syncrude
69
45
76
53
Conventional
13
3
12
3
Total crude oil production
383
371
374
345
NGLs available for sale
2
1
1
1
Total crude oil and NGL production
385
372
375
346
Gross natural gas production
(millions of cubic feet per day)
132
127
138
124
Gross oil-equivalent production
(a)
407
393
398
367
(thousands of oil-equivalent barrels per
day)
Net crude oil and NGL production
(thousands of barrels per day)
Cold Lake
110
119
113
117
Kearl
154
163
139
137
Syncrude
60
45
66
51
Conventional
13
3
13
2
Total crude oil production
337
330
331
307
NGLs available for sale
1
2
2
2
Total crude oil and NGL production
338
332
333
309
Net natural gas production
(millions of cubic feet per day)
131
127
137
122
Net oil-equivalent production
(a)
360
353
356
329
(thousands of oil-equivalent barrels per
day)
Cold Lake blend sales (thousands of
barrels per day)
181
194
186
198
Kearl blend sales (thousands of
barrels per day)
226
234
200
200
NGL sales (thousands of barrels per
day)
5
5
6
5
Average realizations (Canadian
dollars)
Bitumen (per barrel)
51.12
50.42
52.44
45.04
Synthetic oil (per barrel)
77.27
89.70
74.59
83.66
Conventional crude oil (per barrel)
53.90
74.02
54.79
70.69
NGL (per barrel)
14.96
36.92
23.72
38.93
Natural gas (per thousand cubic feet)
1.36
2.19
2.06
2.37
Refinery throughput (thousands of
barrels per day)
363
388
363
386
Refinery capacity utilization
(percent)
86
92
86
91
Petroleum product sales (thousands
of barrels per day)
Gasolines
259
264
250
254
Heating, diesel and jet fuels
164
179
169
182
Heavy fuel oils
25
29
24
25
Lube oils and other products
40
44
38
42
Net petroleum products sales
488
516
481
503
Petrochemical sales (thousands of
tonnes)
194
208
579
626
(a) Gas converted to oil-equivalent at six
million cubic feet per one thousand barrels.
Attachment V
Net income (loss) per
Net income (loss) (U.S. GAAP)
common share - diluted (a)
millions of Canadian dollars
Canadian dollars
2015
First Quarter
421
0.50
Second Quarter
120
0.14
Third Quarter
479
0.56
Fourth Quarter
102
0.12
Year
1,122
1.32
2016
First Quarter
(101
)
(0.12
)
Second Quarter
(181
)
(0.21
)
Third Quarter
1,003
1.18
Fourth Quarter
1,444
1.70
Year
2,165
2.55
2017
First Quarter
333
0.39
Second Quarter
(77
)
(0.09
)
Third Quarter
371
0.44
Fourth Quarter
(137
)
(0.16
)
Year
490
0.58
2018
First Quarter
516
0.62
Second Quarter
196
0.24
Third Quarter
749
0.94
Fourth Quarter
853
1.08
Year
2,314
2.86
2019
First Quarter
293
0.38
Second Quarter
1,212
1.57
Third Quarter
424
0.56
Year
1,929
2.51
(a) Computed using the average number of
shares outstanding during each period. The sum of the quarters
presented may not add to the year total.
View source
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