What was the primary driver for the significant decrease in net income for the first nine months of 2009?

The primary driver for the significant decrease in net income for the first nine months of 2009 was the substantial decline in crude oil and natural gas commodity prices, a result of the global economic downturn. This led to lower revenue and earnings across the company's Upstream segment.

How did the company's capital expenditure plans change in the first nine months of 2009?

Capital expenditures significantly increased in the first nine months of 2009, reaching $1.478 billion compared to $839 million in the same period of 2008. The primary focus of these investments was the advancement of the Kearl oil sands project, with other investments in development drilling, facilities improvements, and exploration.

What is the company's outlook for liquidity and its financing arrangements?

Cash flow from operations decreased significantly due to lower profitability. However, the company entered into a substantial, though undrawn, $5 billion (CAD) loan facility with an ExxonMobil affiliate, providing a significant source of potential future funding. The company also continues to evaluate its share repurchase program in the context of its capital activities.

How did the company's segments perform relative to each other?

The Upstream segment experienced a sharp decline in profitability due to lower commodity prices. The Downstream segment also saw reduced earnings, impacted by lower demand and margins, though it benefited from a less favorable comparison to the prior year. The Chemical segment also reported lower net income due to reduced margins and volumes.

IMO 10-Q Quarterly Report Q3 FY2009 — Revenue, Net Income, EPS

Summary

Imperial Oil Ltd. reported a significant decline in net income for the nine months ended September 30, 2009, compared to the same period in 2008, largely driven by lower commodity prices stemming from the global economic downturn. Net income fell to $1.045 billion from $3.218 billion, with diluted earnings per share decreasing to $1.22 from $3.60. This downturn was particularly felt in the Upstream segment, where lower crude oil and natural gas prices significantly impacted earnings, although partially offset by reduced royalty costs and a weaker Canadian dollar. Despite the challenging operating environment, the company continued to invest heavily in capital projects, most notably the Kearl oil sands project, leading to a substantial increase in capital expenditures. Cash flow from operations also decreased significantly, reflecting the lower profitability and timing of tax payments. The company maintained its dividend payments, with a slight increase in per-share dividends, while also evaluating its share repurchase program in light of its capital activities.

Key Highlights

1Net income for the nine months ended September 30, 2009, was $1.045 billion, a substantial decrease from $3.218 billion in the prior year period, primarily due to lower commodity prices.
2Diluted earnings per share for the nine months decreased to $1.22 from $3.60 in the same period of 2008.
3Capital expenditures significantly increased to $1.478 billion for the nine months ended September 30, 2009, from $839 million in the prior year, largely for the Kearl oil sands project.
4Cash flow from operating activities for the nine months declined to $664 million from $3.351 billion, impacted by lower net income and tax payment timing.
5The company's Upstream segment was heavily impacted by lower crude oil and natural gas commodity prices, with a significant decrease in segment income.
6Downstream segment earnings were affected by reduced demand, lower margins, and a favorable comparison to the prior year which benefited from higher refining margins due to Hurricane Gustav.
7Imperial Oil Ltd. entered into an agreement for a long-term variable-rate loan facility of up to $5 billion (CAD) from an ExxonMobil affiliate, though no funds were drawn.
8The company paid $0.30 per share in dividends for the first nine months of 2009, an increase from $0.28 in the same period of 2008.

IMPERIAL OIL LTD Quarterly Report for Q3 Ended Sep 30, 2009

Summary

Key Highlights

Frequently Asked Questions