Summary
Imperial Oil Ltd. reported a significant decrease in net income for the second quarter and first half of 2009 compared to the same periods in 2008. This decline is primarily attributed to lower crude oil and natural gas commodity prices, a consequence of the global economic downturn. While upstream earnings were substantially impacted, downstream operations also faced challenges, including higher maintenance costs and reduced refining margins. Despite the challenging operating environment, the company made strategic investments, notably advancing the Kearl oil sands project and acquiring new exploration acreage. Imperial Oil also continued its share repurchase program, though at a reduced pace in the second quarter to prioritize funding for growth projects. The company's liquidity position decreased due to lower operating cash flows and increased capital expenditures.
Key Highlights
- 1Net income for the second quarter of 2009 was $209 million ($0.25/share), a sharp decline from $1,148 million ($1.28/share) in Q2 2008.
- 2First six months net income for 2009 was $498 million ($0.58/share), down from $1,829 million ($2.03/share) in the first half of 2008.
- 3The primary driver for the earnings decrease was significantly lower crude oil and natural gas commodity prices.
- 4Upstream segment income was heavily impacted by lower commodity prices, though partially offset by lower royalty costs and a weaker Canadian dollar.
- 5Downstream segment reported a net loss of $38 million in Q2 2009, impacted by higher maintenance activities and lower industry refining margins, and was also affected by a $187 million gain from asset sales in Q2 2008.
- 6Capital expenditures increased significantly in the first half of 2009 ($886 million) compared to 2008 ($274 million), driven by advancements in the Kearl oil sands project.
- 7Cash and marketable securities decreased to $390 million as of June 30, 2009, from $1,974 million at the end of 2008, reflecting lower operating cash flows and increased investing activities.