Summary
Imperial Oil Ltd. reported a decrease in net income for the nine months ended September 30, 2013, to $1.77 billion ($2.08 per share) from $2.69 billion ($3.16 per share) in the prior year period. This decline was primarily driven by significantly lower industry refining margins and increased costs associated with the Kearl and Syncrude operations. Despite lower overall profitability, the company demonstrated resilience in its upstream segment, with higher liquids realizations contributing positively. Capital expenditures remained substantial, focused on major projects like Kearl expansion and Nabiye. The company also significantly increased its debt levels to finance operations and ongoing projects, leading to a reduced cash balance at the end of the period.
Key Highlights
- 1Net income for the nine months ended September 30, 2013, decreased to $1.77 billion from $2.69 billion in the same period of 2012, primarily due to lower refining margins and increased operational costs.
- 2Upstream segment performance showed improvement with higher liquids realizations, partially offsetting increased costs at Syncrude and Kearl start-up expenses.
- 3The company significantly increased its long-term and short-term debt during the third quarter of 2013, raising $819 million in long-term debt and $325 million in short-term debt.
- 4Capital expenditures were substantial, with $1.81 billion invested in the third quarter, primarily for Kearl expansion and Nabiye projects.
- 5The price differential between Brent crude oil and West Texas Intermediate (WTI) narrowed significantly, impacting industry refining margins.
- 6The Dartmouth refinery conversion to a terminal resulted in an after-tax charge of $264 million in the first nine months of 2013.
- 7The company's cash balance decreased to $76 million at September 30, 2013, from $482 million at the end of 2012, reflecting increased debt and capital expenditures.