What were the main factors influencing Imperial Oil's net income in the third quarter of 2007?

Net income was impacted by a combination of factors. Positive contributors included higher crude oil realizations and increased Syncrude volumes. However, these were offset by lower volumes in natural gas, conventional crude oil, and NGLs, weaker realizations for Cold Lake heavy oil, and the negative impact of a stronger Canadian dollar. Favorable refinery operations and inventory effects in the Petroleum Products segment also contributed positively.

How did the company's share repurchase program affect its financials?

Imperial Oil continued its share repurchase program in the third quarter of 2007, buying back approximately 12.8 million shares for $600 million. This activity reduced the number of outstanding common shares, which in turn contributed to a higher net income per share (both basic and diluted) compared to the prior year.

What is the company's outlook on the Alberta government's proposed royalty rate increases?

The company noted that the Alberta government proposed increases to royalty rates on oil and gas production starting in 2009. Imperial Oil believes this proposal could adversely affect future investments in Alberta and its future financial results. The exact impact is uncertain and will depend on the final legislation and future commodity prices.

How did capital expenditures change compared to the previous year?

Capital and exploration expenditures were lower in the third quarter of 2007 ($245 million) compared to the same period in 2006 ($263 million). This reduction was mainly attributed to the completion of major projects, including the Stage 3 upgrader expansion at Syncrude and the ultra-low sulphur diesel project.

IMO 10-Q Quarterly Report Q3 FY2007 — Revenue, Net Income, EPS

Summary

Imperial Oil Limited's third quarter 2007 results showed a slight decrease in net income compared to the same period in 2006, with net income for the quarter at $816 million ($0.88 per share) versus $822 million ($0.84 per share) in Q3 2006. For the first nine months of 2007, net income increased to $2,302 million ($2.45 per share) from $2,250 million ($2.28 per share) in the comparable period of 2006. The company experienced mixed impacts from commodity prices and production volumes. While higher crude oil realizations and Syncrude volumes were beneficial, these were offset by lower volumes in natural gas, conventional crude oil, and NGLs, as well as weaker heavy oil realizations and the negative impact of a stronger Canadian dollar. The Petroleum Products segment saw an improvement in net income driven by favorable refinery operations and inventory effects, partially offset by weaker refining margins. The Chemicals segment, however, reported lower net income due to reduced margins for polyethylene products. Capital expenditures were lower year-over-year due to the completion of major projects, and the company continued its share repurchase program, reducing the number of outstanding shares.

Key Highlights

1Net income for Q3 2007 was $816 million, a slight decrease from $822 million in Q3 2006. Diluted EPS was $0.88 vs. $0.84.
2Nine-month net income increased to $2,302 million ($2.45/share) in 2007 from $2,250 million ($2.28/share) in 2006.
3Stronger crude oil realizations and higher Syncrude volumes were key positive drivers for the Natural Resources segment.
4The Petroleum Products segment benefited from favorable refinery operations and inventory effects, leading to higher net income.
5A stronger Canadian dollar had a negative impact on earnings, particularly affecting crude oil and chemical realizations.
6Capital and exploration expenditures decreased in Q3 2007 compared to Q3 2006, primarily due to project completions.
7Imperial Oil continued its share repurchase program, reducing the number of outstanding common shares and increasing EPS.

IMPERIAL OIL LTD Quarterly Report for Q3 Ended Sep 30, 2007

Summary

Key Highlights

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