Summary
Imperial Oil Ltd. reported a net income of $418 million ($0.49 per diluted share) for the third quarter of 2010, a decrease from $547 million ($0.64 per diluted share) in the same period of 2009. For the first nine months of 2010, net income increased to $1,411 million ($1.65 per diluted share) from $1,045 million ($1.22 per diluted share) in the prior year. The decrease in quarterly earnings was primarily attributed to planned maintenance activities at Syncrude, an unfavorable foreign exchange impact from a stronger Canadian dollar, and third-party pipeline reliability issues, which collectively impacted earnings by approximately $220 million. However, higher upstream commodity prices and improved downstream margins provided some offset. The company significantly increased its capital expenditures, particularly in the Upstream segment, with a focus on the Kearl oil sands project. This led to a substantial increase in cash used in investing activities, resulting in a lower cash balance at the end of the quarter. Despite higher operating cash flow driven by working capital changes, the company increased its debt levels to fund its operations and investments.
Key Highlights
- 1Net income for Q3 2010 was $418 million, down from $547 million in Q3 2009, primarily due to planned maintenance and foreign exchange impacts.
- 2Nine-month net income increased by approximately 35% to $1,411 million, driven by higher commodity prices and Syncrude volumes.
- 3Capital expenditures significantly increased to $1,147 million in Q3 2010 (from $554 million in Q3 2009), largely for the Kearl oil sands project.
- 4Operating cash flow for Q3 2010 was $965 million, an increase from $698 million in Q3 2009, boosted by working capital changes.
- 5The company borrowed $200 million under a long-term agreement with an affiliated company of ExxonMobil, increasing its long-term debt.
- 6Average Brent crude oil prices increased by approximately 13% in Q3 2010 compared to the same period in 2009.
- 7Despite increased capital spending and debt, the company maintained its quarterly dividend payment, with a slight increase in per-share dividends for the nine-month period.